Top-rated Indiabulls Housing Finance has raised Rs 1,000 crore by selling the country's first "Social Bonds" and will use the proceeds in the low-cost or affordable housing sector.
Private lender Yes Bank was the sole investor in the bonds with a five-year maturity, said a top executive confirming the matter. The securities have offered 8.12% yearly.
"The bond sale will act as a catalyst for the social bonds market in India and create a benchmark for future issues in this space," Rana Kapoor, MD of Yes Bank, told ET. "Affordable housing will play a critical role in realising the government's vision of Housing for All."
The bonds will be listed on the National Stock Exchange and the BSE for secondary market trading. The government wants housing for all by 2022.
Social Bonds are a debt instrument to raise funds exclusively to finance or re-finance select and eligible social projects such as affordable basic infrastructure (water, sewers, sanitation and transport), food security, clean energy, healthcare and vocational training.
In this mop-up, Indiabulls has decided to use the proceeds in affordable homes as the housing finance company predominantly lends to that sector with an average loan ticket size of about Rs 25 lakh.
"Our objective is to tap different set of investors by diversifying our borrowing resources," said Gagan Banga, vice-chairman at Indiabulls Housing Finance. "Low-cost housing loans form about 85% of our book where we will deploy the money."
Rating company Crisil upgraded Indiabulls Housing to a triple-AAA rating with a stable outlook in November. A rating upgrade helps a company to reduce its borrowing costs. The social bonds did not fetch Indiabulls any special cost benefit compared with other domestic bonds.
The company aims to increase lending by 30% this year and plans to raise another Rs 10,000 crore by tapping the debt securities market. Indiabulls Housing Finance has also received the Reserve Bank of India's approval to sell $750 million worth of "masala bonds" or rupee-denominated bonds, for which the end-use is planned to be low-cost housing.
The social affordable housing bonds are in line with the Social Bond Principles 2017 issued by the International Capital Market Association. KPMG in India is said to be providing the assurance services on the use of the proceeds.
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