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Market Eye
| DLF to raise $300 mn through ECBs | //2007 23:509:06:00 | India’s largest real estate developer DLF is close to raising $300 million Make home loan repayment easy
EMIs and tenure
Land as investment
Buying house? Quote price
through external commercial borrowing (ECB) to invest Make home loan repayment easy
EMIs and tenure
Land as investment
Buying house? Quote price
in its integrated township
projects, according to a senior company executive, who asked not to be named.
The Delhi-based realty company is likely to raise the funds from Standard Chartered Bank, said the executive. It would be a long-term borrowing carrying an interest rate of around 7%, significantly lower than 12.5%, which is the current average cost of borrowing for DLF. DLF spokesperson didn’t comment on the proposed foreign debt raising.
The fund raising would bring in the much-needed cash-flow to the company at a low cost. The particular project where DLF is planning to deploy the funds couldn’t be ascertained, but as per current Reserve Bank of India (RBI) norms, the ECB money can be used only for building integrated townships.
RBI had permitted real estate companies to raise funds through ECB window for integrated townships late last year to boost activity in the housing sector and fight domestic credit crunch. The credit market had been tight since the fall of US investment bank Lehman Brothers past September. But none of the domestic real estate players looked at the ECB option to raise funds after RBI eased the norms. DLF is possibly the first player in the real estate space to explore this route.
DLF, which had a net debt of Rs 14,000 crore as of end-March, has been raising long-term loans in the domestic market to replace short-term debt.
Since December, the company has raised at least Rs 3,000 crore of long-term debt from a clutch of state-run banks and insurance major LIC at an average interest rate of 14%, much higher than the cost it is looking to borrow in the international market. | Market
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