After going relatively quiet over the last few months, India's securitization market is set to see two major deals before the end of the current financial year in March 2000, with the Housing and Urban Development Corp. (Hudco) hoping to launch a deal backed by infrastructure loans and the National Housing Bank (NHB) inching ever closer to launching India's first MBS.

Despite reports in the business press and on newswires suggesting that Hudco's deal would be structured as a Eurobond, both transactions will be denominated in rupees and aimed at local investors. "It would be impossible to do an international deal backed by local currency flows as the rupee is not a fully convertible currency and you can't get swaps for longer than six-months," said a securitization pro in New Delhi.

According to Hudco chairman, V. Suresh, the state-owned development bank is currently holding a beauty parade to decide on arrangers for a deal worth 10 billion rupees ($237 million). It will be backed by receivables from developments including a road bridge in Maharastra, two airport projects in Kerela and loans to water and road projects in Kanataka and Gujurat. It is likely to have a seven-to-10 year maturity.

If the deal is successful, Hudco will then turn to its extensive mortgage portfolio (worth $5.5 billion at the end of March 1999) for further deals, Suresh added.

Before then, however, the NHB is likely to have launched India's first MBS, which it has been working on since last summer (ASRI 6/15/1998 p.1), according to sources in India. The transaction, worth up to $23 million and with a maturity of around seven years, is expected to achieve a local currency rating of triple-A. It is being arranged by SBI Capital Markets.

Sources in India expected a coupon of around 8-9%.

The deal packages loans acquired by the NHB from local state-level lenders, Housing Finance Companies (HFCs), in states that have dropped stamp duty to 0.1% (from up to 8%) to enable securitization. Those states include Gujurat, Tamil Nadu, Karnataka and Maharastra, meaning that the HFCs that will participate will include HDFC, LIC Housing Finance, Canfin and Dewan Housing.

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