May 20, 2015 / 4:27 AM / 4 years ago

Indian property-backed bond pipeline builds

SINGAPORE, May 20 (IFR) - At least three Indian companies including DLF, the country’s biggest listed developer, are planning to issue property-backed bonds, adding new depth to the local version of commercial mortgage-backed securities.

DLF is working on an offering that could raise up to 36 billion rupees (US$565m), while Phoenix Mills, which mainly develops shopping malls, is planning a property-backed bond of 4.5 billion rupees.

Bangalore-based information technology company Velankani Information Systems is also working on a 3 billion rupee bond backed by income from its properties.

The secured structure is loosely referred to in the local market as CMBS, although there are several differences from the international securitisation standard.

“Such offerings provide new investors and even some savings over a traditional loan,” said a source.

Phoenix Mills is seeking a rating for the structured offering, which will be backed by rental income from its Phoenix Marketcity mall in Chennai, according to sources close to the deal.

DLF’s bonds will be backed by rental income from its four special economic zones operating in Chennai, Hyderabad and Gurgaon, the sources said. DLF Assets will be the borrower.

Phoenix Mills is expected to hit the market soon, followed by Velankani and then DLF.

In 2014, DLF became the first Indian issuer to issue bonds backed against rental income from shopping malls. K Raheja Corp followed later. (Reporting By Manju Dalal, editing by Steve Garton and Daniel Stanton)

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