INSUBCONTINENT EXCLUSIVE:
MUMBAI: Indiabulls Housing Finance plans to raise about Rs 2,000 crore by selling commercial paper (CP) and bonds that will send a positive
signal on pricing of other securities from the industry if successfully executed, analysts said.
“We are looking to raise Rs 2,000 crore
through commercial paper and private placement of nonconvertible debentures,” said Gagan Banga, vice-chairman of Indiabulls Housing
Finance.
In the past three days, Indiabulls has raised Rs 1,400 crore through commercial paper sales
It engages with the bond markets on a continuous basis and has made issuances of over Rs 5,000 crore over the past 10 days.
“If Indiabulls
is able to raise funds at rates close to 9 per cent, it will send a positive, good signal and comfort the market,” said Ajay Manglunia,
executive vice-president and head, fixed income, Edelweiss Financial Services
“This will suggest there is no crisis and market rumors will settle.” Non-banking finance companies (NBFCs) raise commercial paper to
meet short-term fund requirements
Commercial paper rates are 70-75 basis points above those of treasury bills
A basis point is 0.01 per centage point
Some investors fear the adverse impact of concerns related to Yes Bank and DHFL.
“Commonality of clients and the interlink between the
three worries the market,” said an analyst, on condition of anonymity.
Indiabulls said it’s not aware of all the details about its
borrowers but said the main ones don’t have any relationships with DHFL or Yes Bank
Loans for development account for 7 per cent of the book and lease rental discounting on rented office assets is 12 per cent at
Indiabulls.
“Indiabulls Housing’s percentage of borrowing from Yes Bank is around 2 per cent of our total borrowing book, now at Rs 1.2
“Additionally, we have not securitised any loan with them for over five years.”
Amid a 42 per cent fall in DHFL on Friday, Indiabulls
Housing fell 8.18 per cent and Yes Bank 30 per cent, giving rise to fears of a bigger crash triggered by the default at ILFS.
Both DHFL and
Indiabulls are sitting on comfortable cash positions
“Default at ILFS has been a contagion issue and would surely impact the perception for the industry,” said Kapil Wadhawan, chairman,
“We have sufficient liquidity to take care of any redemptions for the rest of the year
We do not expect redemption liability of more than Rs 6,000-7,000 crore until March 2019.”
