HDFC financier has marked a $1.1 billion syndicated social loan facility at about 3.3 per cent rate for financing housing projects, which makes it the largest social finance issuance in the country.
The social loan was priced at 90 basis points over the secured overnight financing rate. It’s a measure of cost of borrowing cash overnight which is collateralised by treasury securities.
This is the largest social loan globally, the first external commercial borrowing (ECB) loan out of India, and the largest ECB loan deal from a housing finance company/private NBFC in India.
The Reserve Bank of India had increased the limit of ECBs under the automatic route from $750 million to $1.5 billion in July 2022. The mortgage has indicated its earnings in the process of raising funds under this window of about $1.1 billion.
“This landmark financing further promotes HDFC’s longstanding mission to be the lending provider of housing finance in India. Proceeds from the social loan would go towards financing affordable housing loans,” the company said.
The funding is secured by the mortgage financier going towards financing affordable housing loans. HDFC has financed 9.5 million housing units and has a gross loan book of Rs 6.7 trillion, since its inception in 1977.
MUFG bank ltd, is the lead loan coordinator in this transaction along with being one of the mandated lead arrangers and borrowers.
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“Affordable housing is a critical component of quality infrastructure as also a growth driver for the real estate industry and the economy at large given its strong linkages to nearly 300 industries. It contributes to capital formation, employment, and income opportunities. A boost to affordable housing will play a significant role towards the ‘Housing for All’ objective of the government. The aspiration to own a home is inherent in every household,” said Deepak Parekh, Chairman, HDFC Ltd.