Never miss a great news story!
Get instant notifications from Economic Times
AllowNot now


You can switch off notifications anytime using browser settings.
11,952.3030.8
Stock Analysis, IPO, Mutual Funds, Bonds & More

Tata Capital Housing Fin places bonds with LIC, raises Rs 1,000 crore

The company directly placed those bonds with LIC.

, ET Bureau|
Updated: Nov 18, 2019, 08.51 AM IST
0Comments
Getty Images
bond-getty
Tata Capital, the holding company of the issuer, also enjoys strong financial flexibility to mobilise long term funding on the back of its established track record and strong parentage.
Mumbai: The country’s largest insurer Life Insurance Corp. (LIC) of India invested Rs 1000 crore in Tata Capital Housing Finance (TCHF) amid signs of improving debt market sentiment, three people with the direct knowledge of the matter said.

More than a year ago, infrastructure conglomerate IL&FS triggered a crisis of capital that kept the largest domestic institutional investor away from taking usual bets on privately held companies.

“The issuer wanted to raise up to Rs 1500 crore, but it closed subscriptions with the single large investor,” said one of the persons cited above.

The company directly placed those bonds with LIC. Those bonds offered 8.35 per cent with staggered maturities up to 10 years. The rate is 183 basis points higher than the benchmark yield. A basis point is 0.01 percentage point.
tata capital-graph

“TCHFL raises funds from time to time for its business operations. As part of this fund raising, it received a bid of Rs 1000 crore for a 10 year non-convertible debentures (NCD) issuance,” said Rajiv Sabharwal, CEO, Tata Capital, in an email.

One-fourths of the sum will be repaid in November, 2026. The rest will follow in next three consecutive years.

In the aftermath of the NBFC crisis, large institutional investors have preferred bonds sold by government-owned companies including Power Finance Corporation, Rural Electrification Corporation and the National Highways Authority of India.

Investor apprehension reflected through much higher bond yields in the secondary market with select yields of lower rated papers surging between 42 per cent and 93 per cent. Bond yields and prices move in the opposite directions.

Two weeks ago, mortgage lender PNB Housing Finance raised Rs 2,500 crore from LIC a through secured redeemable non-convertible debentures, making it the second such issuance of the housing finance company this fiscal year.

Besides, Housing Development Finance Corporation (HDFC) is the only private entity to have retained trust with large state-backed institutions.

Rating company ICRA rated Tata Capital Housing Finance with triple-A (Stable), the top grade.

“ICRA has noted that the company’s ALM profile exhibits some mismatches in the short-term buckets though these are adequately backed by unutilised banks lines. Given the company’s parentage, ICRA expects it to be able to refinance the asset liability gaps,” the rating company said in a note released on October 30.

TCHF’s total assets were at Rs 81,826 crore in FY19 from Rs 64,397 crore a year ago, rise of 27 per cent. The pace of asset growth remains secular in past three financial years.

Tata Capital, the holding company of the issuer, also enjoys strong financial flexibility to mobilise long term funding on the back of its established track record and strong parentage.
Comments
Add Your Comments
Commenting feature is disabled in your country/region.
Download The Economic Times Business News App for the Latest News in Business, Sensex, Stock Market Updates & More.

Other useful Links


Follow us on


Download et app


Copyright © 2019 Bennett, Coleman & Co. Ltd. All rights reserved. For reprint rights: Times Syndication Service