Shriram Finance raises USD 500mn through Social Bonds from International Bond Markets

by Psu Connect
Date: 25-09-24

The bond got an overwhelming response from over 125 investors with the order book in the range of 2.4x of the issue size.

Shriram Finance raises USD 500mn through Social Bonds from International Bond Markets

Mumbai: Shriram Finance Limited (“SFL” or “Company”) One of the India’s largest retail financing Non-Banking Finance Companies has successfully priced a USD 500 million Fixed Rate Senior Secured Rule 144A / Reg S Bond for a 3.5 year tenor at an interest rate of 6.15%. This deal marks the largest deal size by the Company. This is the Company’s 9th successful USD public bond issuance since the relaxation in the ECB guidelines.

Following a strong book build supported by high quality long only marquee investors, the Company was able to achieve tightening in the pricing by 35 bps. This also marks the tight credit spreads over 3 year US Treasuries in our USD bonds.

The bond got an overwhelming response from over 125 investors with the order book in the range of 2.4x of the issue size. The transaction witnessed 47% participation from APAC, 27% from EMEA and 26% from US with 83% investment from asset managers/fund managers, 11% from private banks and 6% from banks.

SFL’s Social Bond issuance is guided by SFL’s Social Finance Framework which is aligned to the ICMA Social Bond Principles. The proceeds from the Social Bonds would be used for employment generation especially through MSME financing. SFL has obtained a second party opinion from S&P and CareEdge on its Social Finance Framework mapping to UNs Sustainable Development Goals - 1. No poverty, 8. Decent work and economic growth, 9. Industry, innovation and infrastructure, 10. Reduced inequalities.

SFL's financial instruments and services provided are:

- Financing to small road transport operators (SRTOs) and first-time borrowers (FTBs) at favorable interest rates, where SRTOs and FTBs are from underserved communities across India;

- Suitable financial instruments and services for micro, small and medium enterprises (MSMEs), whose current asset base does not allow access to mainstream bank credits or without proof of income to qualify for traditional loans; and

- Affordable financing instruments (i.e., personal loans, gold loans) to individuals (i.e., unbanked and/or underserved individuals, including women as a target population).

Mr. Umesh Revankar, Executive Vice Chairman of Shriram Finance Limited, while describing the successful issuance stated “We are delighted to announce the successful placement of our USD 500mn Social Bond, reinforcing our commitment to advancing initiatives through our Social Finance Framework. This opportunistic issuance, executed under favorable market conditions, received an overwhelming response from global investors. As our 9th successful public USD bond issuance, following the USD 750 million transaction in January 2024, this reflects strong investor confidence in our financials, strategic vision, and dedication to fostering sustainable and inclusive growth.”