Shriram Transport raises $475 mn, first NBFC to tap global funds in 2022

(STFC) Monday raised $475 million by selling bonds to global investors as the financier of second-hand trucks sees credit demand accelerating. The proceeds will be used to expand loans with the company raising international money at a relatively cheaper cost.

On January 3, ET reported that Shriram planned to raise about $500 million via an offshore bond sale, which would be the year’s first issuance by a non-banking finance company.

“We expect a strong loan demand in the next few months,” Umesh Revankar, managing director at STFC told ET.

“Government’s spending on infrastructure has lifted overall credit demand,” he said. “Simultaneously, people have started spending on discretionary items.”

The NBFC received bids for subscriptions worth up to $1.5 billion, which was over three times higher than the planned size.

Those bonds finally yielded 4.15 percent with three-and-a-half-year maturity. Due to higher investor demand the yield was tighter by 20 basis points from what it initially proposed at the time of launching the bond sale.

Moreover, the yield is also about 10 basis points lower than the level the borrower raised offshore funds a year ago.

Citi, Deutsche, JPMorgan, HSBC and MUFG are among others, who helped the company sell the bonds.

Global rating company Fitch-rated STFC bonds with ‘BB’ grade, which is known as high-yield in market parlance.