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After tasting success in the Eurobond market with its latest overseas bond offering, Shriram Transport Finance Company (STFC) plans to tap the highly-regulated and deep 144A private placement market in the US next fiscal.
Raises $400 million
The non-banking finance company, a leading asset-finance lender, has now raised $400 million through a three-year tenor Reg S bond offering, which was open to subscription to other than US investors.
The Reg S bond offering, which is part of its External Commercial Borrowing programme, saw huge participation from investors in Asia, Europe and West Asia. It carried a coupon of 5.70 per cent.
“This $400-million Reg S bond mop-up will help us diversify our resource base. With this, we have completed the entire $750-million limit allowed by the RBI for 2018-19. Next year (when fresh limits are available), we will look to tap the 144A market (for US investors),” Umesh Revankar, Managing Director and CEO, STFC, told BusinessLine .
Revankar said the funds mobilised in the RegS bonds will be used for onward lending, in line with the the RBI-specified policy framework.
He expressed confidence that STFC would, in the coming years, be able to mobilise funds at lower rates once a track record gets established.
“This is fully-hedged borrowing for us. You should not look at it from the perspective of the cost for us today. It has to be seen from the long term as every year we can now raise $750 million from offshore markets.”
The latest Reg S bonds will be listed at the Singapore Stock Exchange. “We are overwhelmed by the strong response of the global investor community to our credit story,” said Revankar.
This is not the first time that STFC has tapped the overseas markets for funds. In September last year, it raised $350 million through a five-year ECB loan.
Masala Bond
In the past, the company had even done a Masala Bond issuance at a coupon of 8.1 per cent for five-year tenor.
Revankar, who led the company’s roadshows across Singapore, Hong Kong and London, felt it may not be right to conclude that foreign investors are shying away from Indian debt paper.
“There is good appetite for high-quality Indian paper. Foreign investors are quite confident of India’s economy, growth rates, and we could successfully raise $400 million and got a response of $1.2 billion for our offering,” he said.
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