The National Housing Bank (NHB) tapped the debt mart today with a seven-year priority sector bond issue.
NHB is seeking to mobilise Rs 200 crore via the book-building route and the indicative coupon rate range has been set in the 8.25-8.75 per cent range.
The bond issue, which has a put/call option in the fifth year, also has a clause for retaining oversubscription of an unspecified amount.
More From This Section
It will remain open for subscription till December 3, sources said. NHB had withdrawn the bond issue in September in view of adverse developments in the domestic debt mart following terrorist strikes in the US.
The terms of the previous issue were the same as the current issue except for the fact that indicative coupon rate band then was set higher at 8.60-9.10 per cent.
The regulator of all housing finance companies in the country intends mobilising the funds to meet its operational requirements, mainly for extending refinance to the housing finance institutions.
"The bond issue is not rated but the fact that that the institution is a subsidiary of the Reserve Bank of India (RBI) will see the issue sail through. Moreover, investment in the issue by the banks qualifies for consideration as priority sector lending," said an arranger to the issue. ABN Amro, I-Sec and SBI Capital Markets are lead arrangers to the issue.
The sources pointed out that the NHB Act, 1987, defines that the NHB for the purpose of carrying out its functions can issue and sell bonds and debentures with or without the guarantee of the central government.
It can borrow money from the central government and from any authority/ organisation with the approval of the government.
Meanwhile, the Power Finance Corporation (PFC) has mopped up Rs 354 crore from the bond market last week taking its total borrowing to over Rs 1,970 crore during the current financial year.
"We have raised Rs 354 crore with an oversubscription of Rs 104 crore from the bond market at a coupon rate of 9.70," A Krishnamoorthy, director (Finance), PFC, told PTI, adding that the corporation has decided to retain the oversubscription.
With corporation's emphasis on tapping individual companies' provident and pension funds, PFC collected nearly Rs 100 crore from various provident funds.
Coal miners' pension and provident fund invested Rs 40 crore in the bond issue, Life Insurance Corporation (LIC) provident fund Rs 10 crore, national insurance pension and provident fund Rs 13 crore.
"Since the central board of trustees for provident fund has already had an exposure of about Rs 800 crore in the PFC's bonds, we decided to tap individual companies' funds and the response was quite positive," Krishnmoorthy added.
National Thermal Power Corporation (NTPC) also purchased bonds worth Rs 4 crore and State Bank of Bikaner and Jaipur put Rs 5 crore in the issue.
The bonds have been issued for a period of 10 years with the repayment starting from end of fourth year onward, PFC sources said, adding that each scrip would be tradeable in the market.