Don’t miss the latest developments in business and finance.

Shriram Finance raises $500 million from investors via USD Social Bonds

The company plans to tap the USD bond market again when interest rates ease further

Shriram Finance
Shriram Finance
Subrata Panda Mumbai
3 min read Last Updated : Sep 25 2024 | 6:55 PM IST
Shriram Finance has raised $500 million from global investors through issuance of fixed rate, senior secured social USD notes at a coupon of 6.15 per cent.

This is the first USD bond issuance by the Chennai-based diversified non-banking finance company (NBFC) in financial year 2025 (FY25) and the ninth overall USD issuance.

Previously, the firm had raised $750 million through issuance of social bonds from global investors in January.

The USD social bonds, rated ‘BB’ by Fitch ratings and S&P ratings, issued by the NBFC will be used for onward lending to sustainable income generating segments such as vehicle finance, a top executive of the company said. Additionally, the proceeds would be used for employment generation especially through MSME financing

Under its social finance framework, Shriram Finance promotes financial inclusion through affordable financing to first time buyers and small road transport operators on pre-owned commercial vehicles.
 
Following a strong book build supported by high quality long only marquee investors, the company was able to achieve tightening in the pricing by 35 bps. The bond offering received bids from over 125 investors with the order book in the range of 2.4x of the issue size, with 47 per cent participation from APAC, 27 per cent from EMEA, and 26 per cent from the US. 

More From This Section


While the coupon rate of 6.15 per cent per annum was reasonable, it can see further improvement, the executive quoted above said, adding that with hedging cost, which still remains quite high, the total cost of raising funds through a dollar bond for the company is 25 basis points higher than the rate at which the company raises funds in the domestic capital market.

Typically, the average cost of funds of Shriram Finance is around 9 – 9.25 per cent in the domestic debt capital market, he said. The Chennai based NBFC will look to tap the overseas bond market again to raise funds once the rates ease further.

The company is increasingly looking to raise funds through overseas bond issuance to diversify their borrowing sources although they are comfortable with the bank funding they are receiving. They would also routinely tap the domestic debt capital markets to raise funds.

Commenting on the issuance, Umesh Revankar, Executive Vice Chairman, Shriram Finance said, “This opportunistic issuance, executed under favourable market conditions, received an overwhelming response from global investors.”

“As our ninth successful public USD bond issuance, following the USD 750 million transaction in January 2024, this reflects strong investor confidence in our financials, strategic vision, and dedication to fostering sustainable and inclusive growth,” he added.

Barclays, BNP Paribas, Citigroup, DBS Bank, Deutsche Bank, Emirates NBD Bank PJSC, HSBC, JP Morgan, MUFG, Standard Chartered Bank, and SMBC Niko were the joint lead managers for the USD issuance.  

Also Read

Topics :bond marketfinance sectorGold bond issuance

First Published: Sep 25 2024 | 3:01 PM IST

Next Story