 "Indiabulls Housing raises Rs 1,300 crore through masala bonds")
Indiabulls Housing Finance on Tuesday raised more than Rs 1,300 crore through masala bonds, the proceeds of which would be used partly for affordable housing, according to sources.
The unrated issuance, which was subscribed over two times, saw strong interest from some 20 leading global funds, including Aberdeen, Alliance Bernstein, BFAM Partners, Blackrock, Bluebay, Jupiter and Tosca, sources said.
The bonds, with a maturity profile of three years and one month will have a coupon of 8.57 per cent. Before Indiabulls, HDFC Ltd, NTPC Ltd and Adani Transmission Ltd had raised Rs 6,000 crore through Masala bonds, or rupee-denominated bonds in the overseas market.
Indiabulls Housing’s issuance shows that overseas investors are warming up to the rupee-denominated bond market and have found an alternative source to raise money apart from the domestic corporate bond market. However, the liquidity in the market will not develop anytime soon as more issuances will need to be listed on the exchanges for trading purpose. In the domestic market, 95 per cent of the bonds are privately placed and the same trend can be observed in the overseas markets as well, say bond traders. The bonds issued by Indiabulls Housing will also not be listed.
Since masala bonds are rupee denominated, the Indian issuers won’t have to bear the exchange risk. However, the investors, being subject to withholding tax, want the issuers to price in the tax component in the final coupon and therefore the coupon offered by the investors could be slightly more.
Even then, the coupons offered in the bonds are almost at par or even less than what the companies can hope to raise money in the domestic market as yield-hungry global investors are not hesitant to take a rupee risk, which has shown remarkable stability in the last three years and is considered one of the best-performing currencies in Asia.
The unrated issuance, which was subscribed over two times, saw strong interest from some 20 leading global funds, including Aberdeen, Alliance Bernstein, BFAM Partners, Blackrock, Bluebay, Jupiter and Tosca, sources said.
The bonds, with a maturity profile of three years and one month will have a coupon of 8.57 per cent. Before Indiabulls, HDFC Ltd, NTPC Ltd and Adani Transmission Ltd had raised Rs 6,000 crore through Masala bonds, or rupee-denominated bonds in the overseas market.
More From This Section
The book-runners for Indiabulls Housing’s bond issuance were YES Bank, Axis Bank, BofA Merrill Lynch, Citi, Credit Suisse and Nomura.
Indiabulls Housing’s issuance shows that overseas investors are warming up to the rupee-denominated bond market and have found an alternative source to raise money apart from the domestic corporate bond market. However, the liquidity in the market will not develop anytime soon as more issuances will need to be listed on the exchanges for trading purpose. In the domestic market, 95 per cent of the bonds are privately placed and the same trend can be observed in the overseas markets as well, say bond traders. The bonds issued by Indiabulls Housing will also not be listed.
Since masala bonds are rupee denominated, the Indian issuers won’t have to bear the exchange risk. However, the investors, being subject to withholding tax, want the issuers to price in the tax component in the final coupon and therefore the coupon offered by the investors could be slightly more.
Even then, the coupons offered in the bonds are almost at par or even less than what the companies can hope to raise money in the domestic market as yield-hungry global investors are not hesitant to take a rupee risk, which has shown remarkable stability in the last three years and is considered one of the best-performing currencies in Asia.