Shriram Finance unit raises $300 mn via 'first of its kind' social bonds

MUMBAI (Reuters) - India Vehicle Finance, a Mauritius-incorporated special purpose vehicle set up by Shriram Finance, has raised $300 million in a "first-of-its-kind deal" by an Indian issuer, according to a term sheet seen by Reuters.

The bonds, which come under the "social bonds" category and were issued to U.S. investors, were priced at a coupon of 5.85% late on Monday, inside the initial price guidance of around 6.15%.

While "non-banking finance companies regularly sell similar securitised transactions in the domestic rupee market," the deal is the first of its kind from an Indian issuer as dollar funds are being used to subscribe to local asset-backed securities, two bankers to the deal said.

 

They requested anonymity as they are not authorised to speak to the media.

Proceeds from social bonds are used to address or mitigate specific social issues such as access to essential services, financial inclusion and employment generation, among others.

In this case, the funds will be used to subscribe to rupee-denominated pass-through certificates that denote the ownership of an underlying pool of assets - loans given out to small transport operators and first-time buyers from under-served communities.

The certificates were issued by another Shriram Group entity called Sansar Vehicle Finance Trust in December 2022.

"This is a completely collateralised transaction, and the structured deal has helped us get a rating equivalent to the sovereign for this deal," said Umesh Revankar, executive vice chairman at Shriram Finance.

Barclays was the global coordinator, while BNP Paribas, DBS Bank, Deutsche Bank, HSBC, JP Morgan and Standard Chartered were the lead managers and bookrunners for this deal.