Housing Debt

Oct 21, 2013 (LBO) – Sri Lanka’s HDFC Bank, a 51 percent state-owned mortgage lender said it was offering listed yielding as much 15.5 percent a year. HDFC Bank is offering 1.0 billion rupees of debt with an option to sell another 1.0 billion rupees in case the first tranche is oversubscribed.

The firm is offering 3-year bonds at 14.5 percent with quarterly interest payments of 14.5 percent (annual effective rate of 15.31 percent), 4-year bonds paying 15.0 percent quarterly (AER at 15.78 percent) and 5-years giving an annual 15.5 percent coupon.

The issue opens for subscription on Monday October 21.

The issue was announced before a 50 basis point rate cut by the Central Bank last week.

HDFC has a ‘BBB’ rating from RAM.

The debt also has a mortgage over an identified set of housing loans.

The prospectus says in the event of liquidation, the debentures will rank above voting, non-voting preference shares, subordinated debt and also senior debt of the banks.

Listed debt is tax free this year.

Update II