Muthoot Finance raises $550 mn at 4.4% from international bond markets

Second bond issue from the firm after it placed $450 mn for 3-year tenor at 6.13% in Oct 2019

Muthoot Finance announced Friday that it had raised $550 million in fixed rate senior secured note issued for a three-and-a-half-year tenor at 4.4 per cent. 

This is the second bond issue from the company. It had placed $450 million for three-year tenor at 6.13 per cent in October 2019, as part of a $2-billion global medium-term note programme.

The proceeds will be used for onward lending in accordance with Reserve Bank of India’s external commercial borrowings (ECB) guidelines and other applicable laws, among other things. The bonds will be listed on the International Securities Market of the London Stock Exchange.

MG George Muthoot, chairman, said, “The response from international bond investors in our second issue is quite overwhelming. We are glad to know that global investors have understood our unique credit story acknowledging our long track record in gold loan business. This fundraise will enable us in further diversifying and strengthening our sources of funding.”

The transaction was officially launched on February 18, following which the company engaged several investors during a series of fixed income investor calls in Hong Kong, Singapore, and London. The transaction was launched with an initial pricing guidance of 4.75 per cent on February 20. Following strong order book momentum, supported by high quality real money investors, it was able to tighten pricing by 35 basis points to 4.4 per cent, added the company.

The final order book was in excess of $1.6 billion with 2.9 times oversubscription. The transaction witnessed 38 per cent participation from Asia, 13 per cent from Europe, and 50 per cent from the United States. As much as 89 per cent of investments were from fund managers, six per cent from private banks, three per cent from insurance firms, and two per cent from others.

The company has a network of 4,536 branches across 23 states, the National Capital Region and five Union Territories. It employs 25,149 persons and its loan assets stood at Rs 38,498 crore as on December 31, 2019.