India’s top mortgage lender Housing Development Finance Corp. (HDFC) said it has secured the world’s biggest social loan, a $1.1 billion facility to fund affordable residences, underscoring potential for sustainability-linked financing.
The loan package has been priced at a margin of 90 basis points over secured overnight financing rate. MUFG Bank Ltd. was the lead social loan coordinator and also one of the mandated lead arrangers and borrowers along with CTBC Bank Co., Mizuho Bank Ltd., State Bank of India and Sumitomo Mitsui Banking Corp., according to an HDFC statement.
“Affordable housing is a critical component of quality infrastructure as also a growth driver for the real estate industry and the economy at large,” said Deepak Parekh, HDFC chairman.
HDFC’s loan facility complies with international social loan frameworks that consistently certify, track and monitor the social impact of financing assets, the financier said. Use of proceeds, objectives and transparency are among the main principles of social loans, according to the Loan Market Association.
The credit line and HDFC’s stated objective is in line with a core pledge of Prime Minister Narendra Modi’s government, which has made “housing for all” a policy objective.
HDFC’s jumbo social loan will add to volume of sustainable-linked debt that has taken a beating this year as companies took a back seat to focus on securing or saving cash under increasing inflation. Social loans form a small portion of the overall market for sustainable debt.