“We are working on raising $125 million through ECB which we will close this quarter,” said Girish Kousgi, managing director and chief executive of PNB Housing Finance. “When you look at the all-in pricing the differential when you borrow from a bank and ECB is 40 basis points lower.”
Kousgi explained that while PNB Housing has strong capital ratios, it’s raising funds for normal business operations.
“We have a strong capital adequacy ratio, so we don’t need capital for the next four years, the capital we are raising is for normal business operations,” he added.
Kousgi told ET that the lender is putting in a lot of effort to reduce its cost of borrowing.
On a sequential basis, for the overall portfolio, the cost of borrowing declined by 8 basis points in the September quarter, supported by a credit rating upgrade that enabled PNB Housing Finance to raise debt in the debt capital markets at a lower cost.The lender is focused on raising funds through ECB and NCDs which has helped in the diversification of liabilities. Its incremental cost of borrowings rose 7 basis points sequentially due to a mix of short-term and long-term liabilities.The cost of borrowing at the end of the September quarter stood at 7.84% compared to 7.92% in the June 2024 quarter and 7.99% in the same quarter last year.
“We also got an AA+ rating which has helped us to reduce costs from banks and market borrowing,” he said. “We are also slowly increasing market borrowings, that is NCDs and CPs (non-convertible debentures and commercial papers) as they come at a lower cost.”
The lender hopes to increase the incremental yields on its retail book. The yield from its affordable housing book last year was 11.4%.