HDFC, the country’s largest mortgage lender, has raised a record Rs 25,000 crore through the private placement of bonds.

A statement from the financier said it concluded its largest ever rupee bond issuance on Thursday by raising the amount through 10-year non-convertible debentures (NCDs) carrying a coupon of 7.97 per cent.

This translates to a spread of 49 basis points over Wednesday’s closing 10-year government security yield.

HDFC said the offering received a phenomenal response across all investor categories.

Earlier on Tuesday, HDFC had launched the issue on the electronic book platform to raise Rs 5,000 crore with an option to retain subscription for additional Rs 20,000 crore.

“Today, as soon as the bids opened, there was wide participation from several high-quality investors across insurance companies, pension funds, provident funds, banks and mutual funds.

“The issue was oversubscribed and received 92 bids amounting to Rs 27,863 crore of which the company retained 55 investor bids totalling to Rs 25,000 crore. The benchmark transaction in times of tougher systemic liquidity is indicative of the extent of investor interest and confidence in the group,’’ HDFC added.

Shares of the mortgage lender ended flat at Rs 2701.20 ahead of the announcement.

“Demand in the housing sector continues to be strong throughout the country and across all categories; affordable to premium housing.

“The penetration level of housing in India is one of the lowest in the world. India’s mortgage to GDP ratio is about 11 per cent compared with 20 per cent plus in many other emerging markets and 60 per cent plus in some of the advanced economies. Ona sustainable long-term basis, the demand for housing is expected to remain strong, and investor support in long term financing aids allocation of resources towards on-lending to the sector,” V.S. Rangan —executive director, HDFC Ltd said.

The anticipation of HDFC executing an interest-rate hedge once it completes its mega bond sale, is driving longer-duration bond yields lower, traders said on Wednesday.

To convert the fixed coupon payments on these bonds to floating payments – to match the interest rate profile on the loans it issues – HDFC is considering total return swaps, bankers with direct knowledge of the matter told Reuters.

“HDFC is likely to do the trade on or post-Friday, once it receives the money from its bond issuance,” one of the bankers said.

HDFC which is set to be merged with HDFC Bank had for the third quarter ended December 31, 2022, posted a profit after tax of Rs 3,690.80 crore as against Rs 3,260.69 crore in the year-ago period on a standalone basis.

The company’s core net interest income grew 13 percent to Rs 4,840 crore for the quarter, on the back of the net interest margin at 3.5 per cent and a 13 per cent growth in overall loan book.