HDFC likely to float Rs 2000 crore bonds

Housing Development Finance Corporation Ltd (HDFC) would be raising Rs 2,000 crore in the next two months through bonds to fund its financing activities.

The housing finance company also ruled out any possibility of a rise in interest rates by March 2005.

The housing finance major is also looking at the possibility of entering the pension sector once it is opened.

Talking to reporters on the sidelines of an interactive session, Deepak Parekh, chairman, HDFC, said, "HDFC would be raising around Rs 2,000 crore in the next couple of months that would be required for funding the finance activities."

HDFC has recently raised Rs 1,000 crore on a private placement basis from the domestic corporate debt market. The housing major has floated 5-year debentures at a coupon rate of 5.85 per cent with the arranger being Deutsche Bank, which was subsequently sold to 13-14 banks and mutual funds.

The issue has been listed on the NSE in keeping with the new norms specified by the Sebi.

Meanwhile, the HDFC is also planning to come with a new scheme for builders who would be eligible for 50 basis point discount on their finance cost if they sold their constructed properties, flats and houses on the basis of carpet area and not on the basis of super built up area.

"We want to bring down this racket. This has grown out of proportion and needs to be curbed," he added.

Talking about HDFC's entry into pension sector, he said, "If the regulator allows us, we would be interested in entering the sector with Standard Life with whom we have teamed up for our life insurance business."

Parekh also said that the present government is unlikely to take away any sops in the forthcoming budget for the sector as there is still a large demand supply gap required to be bridged.

Interest rates may move north: Interest rates are likely to firm up around two per cent in the next four to five years according to Deepak Parekh, chairman, HDFC. In the short run -six months or a year "" rates are expected to rise by 50 basis points according to him.

The rate of interest would depend on the government credit policy and liquidity in the economy. If there is an increased economic activity, rates are likely to go up. It would also depend on the rate of inflation in the sector.

He, however, said that stamp duties were acting as deterrent to the growth of the sector as duties as high as 14 per cent in some states were dampening growth. "It was high time the state government took this matter seriously," he warned.