() is asked to join the syndication process which has already confirmed participation from Mizuho Bank, MUFG and standard Chartered BankThe people cited above said.
The proceeds will be used by the nation’s largest mortgage lender to lend to buyers of low-cost affordable homes.
And individual banks did not comment on the matter.
The loan tenure is finally fixed at three years. The loan can be valued after adding around 115 basis points to the global rate gauge Secured Overnight Financing Rate (SOFR).
One basis point is 0.01%.
“Both the borrower and the bank are discussing the matter and the deal is now closing,” said an executive involved in the process.
The central bank last Wednesday announced a slew of measures to ease depleting forex reserves and check the rupee’s fall against the dollar. This created additional space for companies to tap the offshore credit market, raised the limits of external commercial borrowings (ECB) vehicle is now from $750 million to $1.5 billion.
A local borrower availing the ECB option can offer up to 100 basis points more to international investors; This limit is currently capped at 500 basis points.
HDFC is facing strong demand for home loans, leading to the need for more borrowing resources.
On July 4, ET reported that HDFC was planning to raise $750 million through an offshore loan, which is likely to be its last ECB before its merger.
,
The six-month SOFR is now giving a return of around 2.60%. If the borrower hedges the entire fund, he may have to fork out up to 470 basis points, based on the current cost of currency risk cover in the forward market.
bond yield rising
HDFC Ltd bond yields are rising after insurance companies were seen to be hesitant due to a regulatory technicality associated with the proposed merger. They were traditional investors in HDFC bonds, which are considered to have premium credit quality.
Meanwhile, its yield difference
Another top-rated non-banking finance company, has lost around 15-20 basis points.
The central bank last week approved the merger of HDFC with HDFC Bank. It has a total loan book of $86.15 billion, with individuals making up about four-fifths of the size.
Personal loan disbursements climbed 37% year-on-year in FY12, partially aided by growth in the higher income segment. “Overall, we are positive on the merger of HDFC with HDFC; however, in the medium to long term, the strategy to scale up housing loans,
(Priority sector lending) and generating liabilities will be important,” said a note dated June 21.