PNB Housing Finance’s shares grew by 7 percent on 12th Oct 2018 owing primarily to reports that the company is aiming to raise an extra $ 250 to 300 million through ECBs by the end of November, amid the fear and turmoil of liquidity shortage in the market. The PNB Housing stock increased by 6.7 percent to reach a high of INR 925 on the Bombay Stock Exchange.
This activity will be the second time the Punjab National Bank Housing will be using external borrowing to support home loan lending purposes in the last 2 months, in spite of the fact that the company earlier stated that it did not face any kind of shortage of cash flow to meet its needs.
Only last week, PNB Housing had managed to accrue approximately $ 200 million through international investors. The company is also actively working to secure home loan pools worth 1000 to 1500 crore rupees in order to help the capital to be more free and increase the capacity to lend more. In addition, PNB has also received commitments from international branches of local banks for the amount of about $300 million, which might be utilized completely or partially to suit the needs of the home loan lending business entity.
A PNB housing spokesperson stated that the company had a healthy supply of liquidity, and the price of external borrowings comprising hedging prices was at reduced cost by around 25 to 40 points for it. Housing finance companies were allowed by the Reserve Bank of India to raise up to 750 million dollars from international investors through automatic route for no more than 5 years, of which approximately 50 million can be short term borrowing for no more than 3 years. PNB Housing did not borrow anything from local capital markets during the month of September.
The company is looking to enhance cash flows, and has already received sanction letters from large state-owned banks. The firm securitizes some assets under direct assignment as a regular aspect of the firm’s treasury management protocol. During the first half of this year, assets worth INR 3000 crores have been securitized, as banks and other finance organizations are increasingly showing interest to invest in high quality portfolios. The market earlier experienced some relief when the State Bank of India declared its support for NBFCs through deals of securitization.