Indiabulls’ bond sale will test investor confidence in shadow banks

Indiabulls Housing Finance Ltd., one of India’s largest mortgage lenders, is seeking to raise funds in the local public bond market after an absence of three years by the group, in a deal that will test investor confidence in the nation’s non-bank financiers.

Indiabulls Housing is seeking to raise as much as 10 billion rupees ($137 million) through the sale of notes that open for subscription on Monday. Yields on the company’s local-currency bonds surged to more than 40% in 2019, stock exchange data show, as investors soured on debt of the company other Indian shadow lenders following the surprise collapse of a major non-bank financier.

Indiabulls Housing’s return would come as issuance by shadow lenders remains its lowest so far this year since the nation’s credit crisis that began in 2018, after a second-wave of the Covid-19 pandemic slowed debt sales this year. Still, the lender is now benefiting from a resurgence in demfor home purchases amid a recovery in the economy following earlier rate cuts by the Reserve Bank of India to fight the pandemic impact.

Rupee bonds of Indiabulls Housing, whose funding has been in the spotlight, have rallied, yields on its debt securities due in 2023 were recently indicated at about 9.35%. India shadow lenders have sold 1.3 trillion rupees of local-currency notes so far this year, the lowest for such a period in three years, Bloomberg-compiled data show.

Crisil Ratings upgraded the outlook for Indiabulls Housing’s AA rating this year to stable from negative, in a positive move for the financier which lost its AAA rating in 2019. The company sold dollar-denominated convertible notes earlier in 2021, has also priced rupee debt in private placements.

Indiabulls Housing has been able to navigate successfully a period of turmoil for non-bank financial companies, is back on a growth path, said Gagan Banga, managing director at the company in a virtual press briefing on Friday. We “hope to be a regular issuer in the public debt markets,” he said.

Dear Reader,

Business Standard has always strived hard to provide up-to-date information commentary on developments that are of interest to you have wider political economic implications for the country the world. Your encouragement constant feedback on how to improve our offering have only made our resolve commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed updated with credible news, authoritative views incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better more relevant content. We believe in free, fair credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism subscribe to Business Standard.

Digital Editor

Source link