Syndication of Housing Development Finance Corporation's (HDFC) $100 million five-year floating rate notes (FRN) has taken off with roadshows in Hong Kong and Singapore.
The housing finance company closed its sub-underwriting last week, with Bank of Baroda, State Bank of India and Emirates Bank joining the arranger -- Barclays Capital -- as sub-underwriters, each with a commitment of $25 million each.
Despite the tensions between India and Pakistan, the deal received a good interest during the roadshows. The deal offers fees of 50 basis points for sub-underwriters, and 35 basis points for co-arrangers' commitment of $10 million. Lead managers and managers will receive 30 basis points and 25 basis points for their commitment of $5-10 million and $2-5 million respectively.
More From This Section
HDFC offers a coupon rate of Libor minus 1.67 per cent on the FRN, which will be issued at par.
The institution will redeem the notes at a premium of 15 per cent upon maturity. Investors will effectively receive a coupon of 80 basis points over Libor as Barclays will make up for the difference. However, the noteholders will have to sell the redemption premium to the arranger.
HDFC general manager treasury Conrad D'Souza said the issue has received a good response, and the issue ought to close by mid-July. According to analysts, despite the complex nature of the FRN, the issue has been priced lower than the expected coupon rate of 100 basis points over Libor.
Recently, IDBI approached the market to raise $ 75 million at 102 basis points over Libor.