Mumbai: In the largest external commercial borrowing (ECB) by a private finance company, mortgage major HDFC has completed a $1.1-billion ‘syndicated social loan facility’ to fund affordable home loans in India. The ECB is the largest social loan globally and the first social ECB loan out of India.
HDFC has raised the loan at a cost of 90 basis points over the SOFR (Secured Overnight Financing Rate). “After hedging the foreign currency risk, the cost of borrowing is equivalent to the cost of domestic borrowing,” said Keki Mistry, VC & CEO, HDFC. Since its inception in 1977 HDFC has financed 95 lakh housing units and has a gross loan book of Rs 6.7 lakh crore.
The fundraise comes ahead of a proposed merger of HDFC with HDFC Bank. It will help in the merger process as the bank needs to raise additional funds for meeting reserve requirements and refinancing earlier loans. The corporation had initially planned to raise a smaller amount but decided to increase it to $1.1 billion after the RBI doubled ECB limits to $1.5 billion in July 2022. Mistry said that the corporation would look at more ECBs in future.
MUFG Bank (MUFG) was the lead social loan coordinator for the transaction along with being one of the mandated lead arrangers and borrowers (MLAB). Others who participated include CTBC Bank, Mizuho Bank, SBI and Sumitomo Mitsui Banking Corporation.
HDFC’s social loan framework is designed for participants in the sustainability financing market to consistently certify, track and monitor the social impact of financing assets.
HDFC chairman Deepak Parekh said, “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. In India, housing will play an important role as a catalyst for growth with increased demand for affordable housing.”