UAE banks keen to take part in HDFC loan

Fifteen banks from the GCC - 14 from the UAE and The Arab Investment Bank (Taib) from Bahrain - have shown interest in the Japanese yen term loan facility equivalent to $100 million to be raised by India's leading housing finance company, Housing Development Finance Corp (HDFC).

India's leading bank, State Bank of India (SBI), has been mandated by HDFC to arrange this facility where, the Development Bank of Singapore (DBS) Ltd and Raiffeisen Zentralbank Osterreich AG have joined the facility as co-lead arrangers. The facility is already underwritten between SBI (50 per cent) as well as the co-lead arrangers equally.

SBI and HDFC conducted a roadshow here yesterday for the banks which showed keenness to participate in this facility. Similar roadshows were held in Hong Kong as well as Singapore, where the show attracted several financial institutions.

Making a presentation on the financials of the company, K.M. Mistry, managing director of HDFC, said his company intended to diversify the fund base for the company through this term loan facility.

The syndication of this five-year loan which has been launched on August 27, will be closed on September 15. The interest rate payable for this facility has been designed in a way that will fetch 75 basis points per annum over six-month Libor for the first two years, and 85 basis points per annum over six-months Libor for the next three years.

The terms and conditions of this loan facility state that the drawdown of this facility will be in one or more tranches during the availability period and the maturity will be five years after the average drawdown date. The repayment of this facility will be bullet, on maturity date.

The title and fees for arranging this facility has been fixed in a way to give better incentives depending on the value of commitments in Japanese yen. Those who arrange between yen one billion and above will enjoy the title of arranger and will fetch a fee of 60 basis points flat.

Lead managers will be those who arrange between yen 500 million and yen 999 million, and they will be offered 55 basis points flat as fees. The third category, who fall in the yen 300 million to yen 499 million range, will carry the title of manager and they will get 50 basis points flat as fees.

Though the facility is unsecured in nature, the terms and facilities charted out for this facility state that HDFC 's tangible networth shall not at any time be less than Rs19 billion (about Dh1.5 billion) and the interest cover ratio shall not at any time be less than 1.2:1.

It is also stated that, the debt equity ratio at the end of each first financial half-year and each financial year shall not be more than the ratio stipulated for each year.