LIC Housing Finance, HDB cut fundraise amount due to volatile market

Private sector fundraisers such as LIC Housing Finance & HDB cut the fundraising amount due to the volatile market.

Senior executive at a bond placement firm’s words

The issuers are looking for stability. However, the rising crude oil prices and ups and downs in global markets have made the outlook uncertain

Justification

• HBD Financial services, earlier with the intent of raising up to Rs 1800 Cr through 23-months Non-Convertible debentures, now raised only Rs 720 Cr.

• The company’s had a base issue size of Rs. 600 Cr plus a green shoe option worth Rs 1200 Cr, coupon fixed at 7.7% with ‘AAA’ ratings from CRISIL for Rs, 20000 Cr worth NCDs, assigned on 1/09/2023.

• LIC Housing Finance, another giant mortgage lender raised Rs 941 crore against an indicative amount of Rs 1,500 crore through 59 month maturity, privately placed bond with fixed coupon of 7.7%.

• LIC had a base issue size of Rs 500 crore, plus a green shoe option of Rs 1,000 crore.

• According to market dealers, smaller bond issuances with lower fundraising amounts are trending against big-ticket fundraise.

• Varroc Engineering raised Rs 250 Cr through a five-year bond with a coupon of 9.2%. Its NCDs carry an “A+” rating from India Ratings.

• Spandana Sphoorty, a MicroFinance company, issued Rs 100 crore worth of 18-month debentures at a 10.43 % coupon rate having an 'A' rating from India Ratings, according to bond dealers.

• The bond dealers are sticking with pre-determined coupon rates, due to high volatility of yield, leading the yield to move up & down by 25-50 basis points in a week.

• The issuers will only take up higher amounts only if the yield (coupon rates) are near the pre-determined level.