Indiabulls Housing raises $350 million via dollar bonds

Mumbai: Indiabulls Housing Finance has raised $350 million by selling dollar bonds to overseas investors in Asia and Europe in its maiden issuance abroad with an aim to diversify its borrowing sources even as domestic market liquidity remained tight.

The company priced the bonds at 6.37% tighter than the initial guidance of 6.5% and collected about $1 billion from investors allowing it to price the issue more tightly. The company is likely to swap bonds for rupees to be lent in India. The bonds will mature in three years.

“This bond will cost Indiabulls about 11% after taking into account the swap costs and other costs like with holding tax, so in that sense its not cheap. However, at least foreign investors are ready to give them some money unlike the domestic market, which is so tight that even bank funding is difficult,” said a person familiar with the deal.

Another person familiar with the deal said that 75 investors including from BlueBay Asset Management, Aberdeen Asset Management, BlackRock, Morgan Stanley, Nomura and Fidelity had bid for a portion of the high yielding bonds. Individual investors could not be contacted immediately for their comments.

The company is the latest to tap the overseas market, which has seen more than $10 billion raised, on course to surpass the $15 billion raised in 2017. Indiabulls has however previously raised rupee funds from overseas investors through masala bonds.

A host of banks including Barclays, HSBC, MUFG, Credit Suisse, Sun Global and Deutsche Bank were involved in this deal.

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This fund raising for Indiabulls comes even as NBFCs struggle to raise money domestically since infrastructure conglomerate IL&FS group companies defaulted on a series of bonds since September last year. More such firms are lining up.

“Many other companies will tap this overseas credit market after a new government is in place. All of them have already appointed investment bankers,” said a senior executive with direct knowledge of the matter.

Five large non-banking finance companies (NBFCs), including Bajaj Finance and Piramal Capital Housing Finance, plan to raise up to $2.5 billion in maiden dollar-bond sales as they diversify financing base and cut reliance on local funds that had become difficult to obtain late last year, ET reported on April 4.


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