The home financier is in advanced talks with investors including
and , said people familiar with the matter.
The plan is to raise at least Rs 5,000 crore, with an option to retain up to Rs 10,000 crore in case of higher demand for the bonds.
While the two private banks may subscribe about Rs 2,500 crore each, demand from other institutional investors will determine the final subscription size, the people said.
The bonds, which are likely to offer 7.80% with a 10-year maturity, will be up for sale later this week or early next week, the people said.
HDFC Ltd, ICICI Bank and Axis Bank did not comment.
“What is unique this time (fiscal 2023) is that the mortgage lender is raising bonds in bulk for longer tenors,” said Ajay Manglunia, managing director – Investment Grade group at
. “The HFC won’t be able to raise similar kind of (secured) instruments once it is merged (as proposed with ). With rising home loan demand, it is also obtaining a fair rate and decent appetite, which might not be possible under a bank.”
On July 26, HDFC had raised Rs 11,000 crore via local bonds that offered 8% with 10-year maturity.
At that time, the benchmark bond yielded about 7.35%. On Tuesday, the sovereign gauge yielded 7.19%.
The differential, or spread over the benchmark, remains in the range of 65-70 basis points going by the latest yield guidance.
raised Rs 2,474 crore via perpetual bonds that offered 7.88% under what was billed as “finer pricing”. Those additional tier-1 bonds are riskier quasi-equity instrument.
HDFC Ltd is currently going through the merger process with HDFC Bank. Two weeks ago, the Competition Commission of India approved the merger proposal.
In early August, HDFC had raised $1.1 billion via a syndicated loan.
The housing finance company reported a 22% increase in fiscal first-quarter net profit at Rs 3,669 crore on the back of strong loan demand from individuals and also helped by dividend income from subsidiaries.
Assets under management increased to Rs 6.71 lakh crore from Rs 5.74 lakh crore a year earlier. Individual loans comprised 79% of the AUM and grew 19% year on year.
HDFC shares rose 3.37% to close at Rs 2446.20 on the BSE Tuesday.