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IIFL Finance set to raise Rs2,000 cr via retail bonds

Mumbai | January 16 2019 11 : 28 IST | The Economic Times

The bonds, which will open for subscriptions next Tuesday, offers as much as 10.5%, the highest among retail debt sold recently across three-five-ten-year maturities, said two people with direct knowledge of the matter. The bonds are taxable. 

IIFL Finance, backed by the UK-based CDC Group, is set to raise up to Rs 2,000 crore in public bond issuances as it seeks to increase the share of long-term borrowings in its total debt.

The bonds, which will open for subscriptions next Tuesday, offers as much as 10.5%, the highest among retail debt sold recently across three-five-ten-year maturities, said two people with direct knowledge of the matter. The bonds are taxable. 

The base size of the issue is Rs 250 crore, while the borrower can retain subscriptions up to Rs 2,000 crore. 

Edelweiss Financial Services, ICICI Securities, IIFL Holdings Limited, and Trust Investment Advisors are helping the company manage the bond sale. 

Those papers will be listed on the BSE and NSE, giving an opportunity for secondary market trading, although the liquidity for AA-rated bonds is yet to be established in India. The bond sale is expected to close on February 20. 

"On the asset-liability management (ALM) front, we were well matched in all the buckets," Nirmal Jain, chairman of the financial services group, had said in an interview to ET three weeks ago. 

"In view of the changed liquidity scenario, we are actively looking to reduce the share of commercial paper funding by 40-50 percent by End-December. CPs will be replaced by term loans, NCDs (nonconvertible debentures) and off balance-sheet borrowings," he had said in the interview. 

Commercial papers (CP) constituted 24 percent of the borrowings in the September quarter. 

The incremental cost of borrowing for the company has risen by about 75-100 basis points. The average cost of borrowing is estimated to rise by 30-40 bps due to the higher rate of interest and changes in the liability mix toward more long-term borrowings. 

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