MUMBAI: Indiabulls Commercial Credit, a subsidiary of Indiabulls Housing Finance that gives retail loans other than those for buying homes, is for the first time tapping the capital market to raise about Rs 2,000 crore in a local public bond sale.
The bonds may offer rates in the range of 8.80-9.10% across three-five and 10-year maturities, two market sources told ET. The issue will open for subscription in the next few weeks.
“This is the first such retail bond sale of the company as it aims to diversify its borrowing sources,” said one of the persons cited above.
Crisil and Care rated the company triple-A, the top grade. Final rates are yet to be decided.
Bank loans form about 42% of their total borrowings while commercial papers and short term debt instruments fund about 33%. The company seeks to increase the share of the bond market borrowing.
The company has a loan book (assets under management) of around Rs 8,200 crore as on March 31, 2018.
Edelweiss, Axis Bank, Trust Capital, Yes Bank and A K Capital are helping the company raise the money through the bond sale.
Indiabulls Commercial intends to use the proceeds for both expanding loans and repaying existing borrowings of the company, which focuses primarily on long-term secured mortgage-backed loans.
In FY2018, mortgage loans constituted more than 98% of the total assets under management.
The company offers loans against property to salaried and self-employed individuals and small and medium-sized enterprises.
The company has filed an initial draft prospectus with the Securities and Exchange Board of India, the capital market regulator.
“We also offer mortgage loans to real estate developers in India in the form of lease rental discounting for commercial premises and construction finance for the construction of residential premises,” the company said in the draft prospectus.
Companies are increasingly tapping the retail bond market amid investment appetite from retail investors. While companies seek to diversify their borrowings, retail investors chase higher interest income from rising interest rates.
Aadhar Housing Finance, an arm of WGC-controlled Dewan Housing Finance, will soon raise about Rs 1,400 crore while Tata Capital is likely to raise Rs 7,500 crore in the next one month.
Earlier on July 16, ET reported that non-banking finance companies were planning to raise Rs 19,000 crore collectively within the next few months.