DLF mops up Rs 720 crore from bond sale

DLF mops up Rs 720 crore from bond sale
Business Standard, February 27, 2009, page 6

Raghavendra Kamath & Gautam Chakravorthy / Mumbai

DLF, the nation’s biggest real estate developer, has raised Rs 720 crore from selling bonds to insurance companies as part of its plan to raise Rs 5,000 crore from such sales.

DLF on February 24 raised the funds through issue of non-convertible debentures maturing in five years which offered as much as 14 per cent interest, sources in the company said. The bonds were sold to Life Insurance Corporation (LIC) of India and a few others. DLF officials were not available for comments.

DLF in March disclosed plans to raise Rs 5000 crore from selling bonds to investors. It received a ‘AA stable’ rating for the issue from Crisil. However, the rating company in January downgraded the real estate developer’s pass through certificates to ‘A+’ from ‘AA-’ because of “slowdown in the company’s real estate sales”.

The developer, while announcing its quarterly results, admitted that it had put a quarter of its projects on hold.

The rating company believed that the sales would continue to adversely affect DLF’s operating cash flows. The realtor has been forced to increasingly rely on refinancing of its debt, Crisil said.