NBFCs tapping NCD market to raise funds amid Covid crisis

May 2, 2020 12:01 AM

The three year NCD issue of Indiabulls Housing Finance opened on April 29. Although, the base issue size was Rs 100 crore, but it had a greeshoe option of Rs 900 crore.

The three year NCD issue of Indiabulls Housing Finance opened on April 29.

By Ankur Mishra

Non-banking financial companies (NBFCs) are tapping non-convertible debenture (NCD) market for raising funds during Covid-19 crisis. Indiabulls Housing Finance (IHF) has already raised more than Rs 200 crore and IIFL Finance is aiming to raise Rs 1,000 crore through the NCD route.

“Indiabulls Housing Finance NCD issue via private placement is closed now. The base size of the issue was 100 crore and the company received bids of over Rs 200 crore at 9.1% per annum,” the company spokesperson told FE. Similarly IIFL Finance board is going to meet on May 6 for raising upto Rs 1,000 crore through NCDs offered via private placement.

The three year NCD issue of Indiabulls Housing Finance opened on April 29. Although, the base issue size was Rs 100 crore, but it had a greeshoe option of Rs 900 crore. Rating agency Crisil had issued it a ‘AA’ rating, and Brickwork Ratings assigned ‘AA+’ to the instrument. The company, on April 24, though a stock exchange filing said that it has remitted external commercial borrowing (ECB) repayments of Rs 1,140 crore. FE had earlier reported that Indiabulls Housing Finance needs to repay Rs 604 crore for NCDs maturing between April and June, 2020.

However, the company said that it had sufficient liquidity to meet any requirement. Delhi high court, on April 29, had stayed the interim relief granted to Indiabulls Housing Finance with respect to repayment of its dues to NCD holders. Earlier, the court had granted protection to the company from any coercive action in the event of it failing to make repayments to its debenture holders due to Covid-19.

According to Crisil, NBFC sector may face liquidity stress with almost Rs 1.75 lakh crore debt obligations maturing by June this year. Despite RBI announcing a moratorium on term installment payments on March 27, many banks did not pass on the benefit of moratorium to NBFCs.The sector faced a double whammy as NBFCs followed RBI’s instruction on deferring installments to borrowers, but they did not get the same relief from the banks. The regulator had also announced targeted long term repo operation (TLTRO) 2.0 of `50,000 to begin wih for NBFCs.  However, the first auction under TLTRO 2.0 for Rs 25,000 crore with a 3-year tenor received total bids amounting to Rs 12,850 crore, implying a poor response with a bid to cover ratio of 0.5.

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