Don’t Miss Out! HDFC’s Largest-Ever Rupee Bond Issuance

India’s biggest mortgage lender, Housing Development Finance Corp. (HDFC), has priced its largest-ever rupee bond issuance. This move comes ahead of a merger with its banking unit, which will create an Indian financial services behemoth valued at over $200 billion. According to insiders, the company will raise 250 billion rupees ($3 billion) selling notes due in ten years at a coupon of 7.97% on Friday.

Supporting the Housing Finance Business

The proceeds of the bond issuance will support the company’s housing finance business, according to the insiders. This issuance marks HDFC’s increased borrowing from notes, as the merger with HDFC Bank Ltd. will make accessing the bond market more challenging. The merged entity will be classified as a bank, which means it can only raise funds through bonds either to meet capital requirements or for funding infrastructure projects.

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Top Seller of Rupee Bonds in 2022

Last year, HDFC was India’s top seller of rupee bonds, according to data compiled by Bloomberg. The merger is expected to conclude next quarter and will give HDFC access to low-cost current and savings account deposits and time deposits of the bank. This move will allow the financier to continue expanding its assets, which stood at about 7 trillion rupees at the end of December.

Arrangers to the Issuance

Axis Bank Ltd., HDFC Bank, ICICI Bank Ltd., and ICICI Securities Primary Dealership Ltd. are the arrangers to the issuance, according to the insiders. The bond issuance aims to generate support for HDFC’s housing finance business, which will help finance the merger with HDFC Bank Ltd. The bond issuance is critical to HDFC’s future success, as it looks to expand its assets and maintain its status as India’s top seller of rupee bonds.