Realty major Lodha Group’s subsidiary Lodha Developers International has priced a $125 million tap of its 2020 bonds at a yield of 8.89 per cent, lowering its borrowing cost by 310 basis points or 3.1 per cent compared to earlier bond sale.

The company said that the tap proceeds will be used to pre-pay higher cost debt. The original issue was done at a yield of 12 per cent.

The tap was done at a price of 106.25, at a premium to the original issuance. The bonds are listed on the Singapore Stock Exchange (SGX), the company said in a release.

The tap was intended to be of $100 million and received strong interest from global investors, especially real money accounts.

The total order book at final pricing was in excess of $320 million. On account of this strong interest, the deal was upsized to US$125mm.

Lodha Developers International Limited, rated B2/stable by Moody’s and B stable by Fitch.

Both agencies have reaffirmed the rating following the bond tap announcement last week. Moody’s also announced that Lodha would benefit from high-cost-debt reduction via bond tap and government's affordable-housing push.

Last week Fitch Rating had said proposed tap issue of its 12 per cent senior unsecured US dollar notes due in 2020 will lower its near-term onshore refinancing requirements, as the company plans to use the proceeds to repay intra-group debt due from its London projects to its Indian operations. This will in turn repay its onshore bank debt.

Fitch said Lodha reported robust property presales of ₹3,660 crore and cash collections of ₹4,470 crore billion for the six months ending-September 2017 (1HFY18).

The pace of the company's collections has increased due to a number of large projects being completed.

Lodha's strong sales are partly driven by the Palava project in Maharashtra, which benefits from the Indian government's push to provide affordable housing through tax and interest-cost incentives for buyers.

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