Mortgage lender Housing Development Finance Corporation (HDFC) on Monday said it plans to raise up to Rs 3,000 crore through masala bonds. The company added it has appointed Axis Bank, Credit Suisse and Nomura as joint bookrunners and lead managers to the issue.
The lender said it plans to raise Rs 2,000 crore with an option to retain over-subscription of up to Rs 1,000 crore. The bonds, HDFC said, will bear a fixed coupon and will have a tenor of 3 years and 1 month.
“The corporation proposes to list the notes on the London Stock Exchange and the pricing will take place on or before Friday, July 15, subject to market conditions and settlement shall be in the following week,” HDFC said in a statement.
It will be the first Indian public issuer of synthetic rupee notes or masala bonds since the Reserve Bank of India (RBI) allowed companies to issue rupee-denominated bond overseas in September last year.
“HDFC is keen to diversify its borrowing profile by tapping global investors through this issue of Rupee Denominated Bonds. This milestone issuance, the first of its kind should validate the attractiveness of the instrument and set a good benchmark,” said Deepak Parekh, chairman of HDFC.
FE had earlier reported that masala bonds could be priced either 50 basis points (bps) higher or 50 bps lower than the borrowing rate which HDFC enjoys in the domestic market for a matching tenure.
Currently, HDFC borrows at around 8.30-8.35% in the domestic market for a tenure of five years. In the case of masala bonds, the currency risk lies with investors, who therefore were seeking a higher rate.
‘Meanwhile, in April, RBI decided to cut the minimum maturity period for rupee debt issued abroad — masala bonds — by domestic companies to three years from five years.
It said an entity can borrow a maximum of Rs 5,000 crore in a fiscal through issuance of rupee-denominated bonds overseas under the automatic route from $750 million earlier.