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IFMR Capital said it has facilitated a ₹50-crore debt for Jaipur-based non-banking finance company Ess Kay Fincorp Pvt Ltd, through two single issuer partially credit enhanced bonds, also known as SPiCE bond, transactions.
According to an IFMR press release, the SPiCE bond is a unique product structure introduced for the first time in the corporate sector. Sundaram Asset Management Co and Principal PNB Asset Management Co have subscribed to the debentures. The tenure of both issuances, rated A(SO), is 24 months.
The uniqueness of this structure, according to IFMR, is in the unconditional and irrevocable partial guarantee of 24 per cent provided by IFMR Capital and an additional security cover pool. The guarantee and the cover pool reduce risks for investors and provide credit enhancement for the issuance. The risk decreases gradually as the underlying bond amortises and the guarantee builds up. For originators, according to the release, such structures offer higher ratings and enable them to access mainstream investors such as mutual funds, pension funds and insurance companies.
Ess Kay, which provides vehicle finance, small business loans and agri equipment finance, had raised ₹25 crore via market and credit-linked debenture in August 2017. The company has 239 branches catering to the under-served markets in Rajasthan, Gujarat, Punjab, Madhya Pradesh and Maharashtra.
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