Indiabulls Housing hasn’t had a large bond issuance since July.
Indiabulls Housing hasn’t had a large bond issuance since July.

Indiabulls Housing runs to banks for funds as bond yield spikes

  • Indiabulls Housing’s rupee note due September 2021 traded at a record 43.04% yield on Thursday
  • Moody’s had cut the ratings on Indiabulls by three notches after RBI rejected its proposal to combine with Lakshmi Vilas Bank

Mumbai: Indiabulls Housing Finance Ltd. plans to rely more on bank loans and commercial paper to meet its funding needs because of waning appetite for bonds sold by Indian shadow lenders, according to the Managing Director of the financier.

While the lender itself hasn’t had a large bond issuance since July because of the troubles plaguing the industry, an attempt by its consumer finance unit to raise at least 100 crore ($14 million) met with poor response last month.

What’s more, Indiabulls Housing’s rupee note due September 2021 traded at a record 43.04% yield on Thursday, which the company said is an erroneous trade.

“There was a transaction, erroneous as it may have been, yesterday which can potentially disrupt the whole franchise," Gagan Banga, managing director of Indiabulls Housing said by phone on Friday. “It will be foolhardy for me to go back to the same business model where I’m relying heavily on bonds and having 50 to 60% of financing coming out of it."

Moody’s Investors Service cut the ratings on Indiabulls by three notches this week after the central bank rejected its proposal to combine with Lakshmi Vilas Bank. The merger would have helped the lender to access low-cost funds and tide over a jolt to India’s non-banking financial companies following shadow lending giant IL&FS Group’s collapse last year.

This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.

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