HDFC Bank To Raise $750 Million In Offshore Debt To Lend For Low-Cost Housing

Housing Development Finance Corporation (HDFC) plans to raise $750 million in what will most likely be its final external commercial financing even before the mortgage lenders’ projected unification with HDFC Bank.

The funds will be utilised to make loans to customers of low-cost homes. The five-year credit line is being syndicated by a group of institutions that includes Mizuho Bank, MUFG, and Standard Chartered Bank.

The realm of international banks may grow in the future. The loan could be priced by adding 110-120 basis points to the term SOFR (Secured Overnight Financing Rate), a worldwide rate indicator that is now yielding roughly 2.63 per cent. If the debtor shields the entire amount, the client may have to pay an additional 400-450 basis points depending on the present cost of price volatility insurance in the futures market.

As per HDFC’s investor presentation, the home lender had a total debt of $65.83 billion as of March 31, FY22. Only around 3% is generated through foreign financial contracts (ECB), whereas 40% is raised using domestic bonds. The remainder is distributed into bank term loans (25%) and a higher share of public deposits (32%).

The companies expect India’s housing loan industry to quadruple to $600 billion in the next five years, with loan saturation of 13 per cent of GDP, still lower than in other developing markets. “It believes that contained within a banking system is the best way to scale up housing finance.” “The financing resource management will be substantially larger and at cheaper costs,” the stockbroker predicted.

The corporation is awaiting regulatory permission for the merger agreement of HDFC and HDFC Bank. HDFC has a gross loan book of $86.15 billion, with individuals accounting for around four-fifths of the total.