Indiabulls Housing Finance bonds trade at unusually high yields

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Published: October 18, 2019 2:35:36 AM

Ratings agency Crisil has reaffirmed the long-term bank facilities and debt instruments of Indiabulls Housing Finance at “CRISIL AA+”, while the rating on short-term bank facilities and the short-term debt programme has been reaffirmed at 'CRISIL A1+'.

Indiabulls, Indiabulls Housing Finance, bonds trade, Market news, OTC, trade data,CRISIL, NSE, BseGagan Banga, vice chairman and managing director of Indiabulls Housing Finance, told FE that he believes these were freak trades.

Bhavik Nair & Anwesha Ganguly

Bonds belonging to Indiabulls Housing Finance traded at a higher-than-usual weighted average yield on Thursday, with the yields varying in the range of 31.51% to 43.04%, according to over-the-counter (OTC) trade data of listed bonds put out by the National Stock Exchange. This could indicate that either these were freak trades or the bonds were deliberately sold at a huge discount.

Gagan Banga, vice chairman and managing director of Indiabulls Housing Finance, told FE that he believes these were freak trades. “Our credit rating has just been reaffirmed on Wednesday at AA+. We carry about Rs 18,000 crore of cash and cover our next 12 months of liability. I don’t see a fundamental reason why the bonds of a company like ours should trade (at these values).”

Banga said the company has launched an offer to buyback its bonds. It is not yet clear which bonds the company intends to buy back.
Ratings agency Crisil has reaffirmed the long-term bank facilities and debt instruments of Indiabulls Housing Finance at “CRISIL AA+”, while the rating on short-term bank facilities and the short-term debt programme has been reaffirmed at ‘CRISIL A1+’.

A bond dealer FE spoke to said these bonds might have been traded by someone who might not have owned them directly but were handling them for other investors. “This does not represent the true price of the bonds and I do not believe this may have a huge impact on the trades in upcoming days. However, only time will tell. What I believe is these trades could have been carried out by either a pension fund or a mutual fund. However, it is not yet clear,” the dealer said. FE could not independently verify the same.

NSE data showed there were three different trades where the weighted average price of the bonds traded stood in the range of just above Rs 60. The total value of the three trades stood at Rs 210 crore, according to NSE.

The bond dealer also said such kind of trades had happened in the past with bonds of other firms due to the tight liquidity environment and the stress in the non-banking finance sector. “We saw similar trades in the past. However, prices have stabilised despite those trades where bonds were sold at a discount,” he said.

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