Updated March 19th, 2024 at 19:13 IST

India Vehicle Finance raises $300 million through social bonds

The bonds, categorised as "social bonds," were priced at a coupon of 5.85 per cent late on Monday, below the initial guidance of around 6.15 per cent.

Reported by: Business Desk
Government bonds | Image:Republic
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India Vehicle Finance, a Mauritius-based foreign portfolio investor, has successfully raised $300 million to invest in securitisation issued by Shriram Finance, marking a major milestone as the first-of-its-kind bond deal by an Indian issuer, according to a term sheet reviewed by Reuters.

The bonds, categorised as "social bonds," were priced at a coupon of 5.85 per cent late on Monday, below the initial guidance of around 6.15 per cent. These funds will be utilised to address specific social issues such as financial inclusion and employment generation.

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Parag Sharma, Joint Managing Director and Chief Financial Officer of Shriram Finance, expressed the company's strategy to diversify funding avenues and investor base in the offshore market, highlighting the significance of this offering.

The structured deal represents a collateralised transaction, ensuring a rating equivalent to the sovereign for the deal, as stated by Umesh Revankar, Executive Vice Chairman at Shriram Finance.

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The proceeds will be directed towards rupee-denominated pass-through certificates, representing ownership of assets comprising loans extended to small transport operators and first-time buyers from under-served communities.

Sharma stressed that the benefit of credit enhancement derived from secured underlying assets, resulting in more favorable pricing compared to the company's previous dollar bond issuance in January.

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In January, Shriram Finance raised $750 million through the issuance of US dollar-denominated bonds maturing in three years and three months at a semi-annual coupon of 6.625 per cent.

(With Reuters inputs)
 

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Published March 19th, 2024 at 19:13 IST