Indian lender HDFC's biggest-ever bond issue to see strong demand - bankers

By Dharamraj Dhutia

MUMBAI (Reuters) - The biggest-ever bond issue by India's Housing Development Finance Corp is expected to go smoothly without any major increase in interest costs for the financier as long-term investors will likely absorb the sale, bankers said.

HDFC aims to raise at least 50 billion rupees ($603.4 million) through the sale of 10-year bonds on Thursday, with an option to retain an additional 200 billion rupees.

If the company garners full the quantum, this would also be the biggest-ever privately placed debt issue by an Indian company.

"(India's) large state-run insurance and provident fund house have both likely committed (to invest) half the total amount," one of the merchant bankers to the issue said.

"The remaining amount could be raised by tapping other investors and banks."

The merchant banker spoke on the condition of anonymity as they are not authorised to speak to the media.

HDFC may offer a coupon rate in the range of 7.96%-7.99%, bankers said.

HDFC officials did not reply to a Reuters mail seeking comment.

Axis Bank, ICICI Bank, HDFC Bank and ICICI Securities Primary Dealership are the arrangers for the bond issue.

FUNDRAISING BURST

HDFC has so far raised 534.14 billion rupees through private placement of bonds in the current fiscal, already the highest it has raised in any financial year.

If the issue goes through, HDFC's fundraising would be higher by 50% as compared to 2021-22, when it had raised 500 billion rupees, according to data from information service provider Prime Database.

The company's fundraising via private placement stood below 250 billion rupees in 2013-14.

HDFC is raising funds as it would help them meet capital requirements after the upcoming merger with HDFC Bank, bankers said.

"It is comparatively easier for the NBFC to raise funds as compared to a bank fundraising, and hence HDFC, which has sufficient investor comfort, opted for such large size," one of the bankers added.

This could be the last issue from the company before the merger, which is likely to be completed in the next financial year, bankers added.

($1 = 82.8620 Indian rupees)

(Reporting by Dharamraj Dhutia; Editing by Janane Venkatraman)