Shriram Finance sets new benchmark with largest ever bond issuance of $750m
Shriram Finance Limited (SFL), one of India’s largest retail financing Non-Banking Finance Companies, has successfully priced a USD 750 million Fixed Rate Senior Secured 144A / Reg S Bond for a 3.25-year tenor, marking the largest deal size by the company. This significant financial milestone is the company’s 8th successful USD public bond issuance since the relaxation in the External Commercial Borrowing (ECB) guidelines.
Exceptional Market Response and Pricing Achievement
The bond issuance witnessed an extraordinary response, attracting over 200 investors and achieving an order book approximately four times the issue size. This overwhelming demand led to the highest pricing tightening in the company’s history by 37.5 basis points, also marking the tightest credit spreads over 3-year US Treasuries in SFL’s USD bonds. The transaction saw balanced participation globally, with 32% from APAC, 32% from EMEA, and 36% from the US.
Investor Profile and Distribution
The diverse investor profile included 81% asset managers/fund managers, 10% from Sovereign Supranational and Agency / Insurance, and 3% from private banks and others. This distribution highlights the strong confidence and interest from a wide range of global investment sectors.
Shriram Finance Limited Secures Record $750 Million in Largest Bond Issuance
Alignment with Social Bond Principles and Sustainable Development Goals
Guided by SFL’s Social Finance Framework, the bond issuance adheres to the International Capital Market Association (ICMA) Social Bond Principles. The proceeds from the bond will be utilized for employment generation, particularly through Micro, Small, and Medium Enterprises (MSME) financing, aligning with United Nations Sustainable Development Goals (SDGs) such as No Poverty, Decent Work and Economic Growth, Industry, Innovation and Infrastructure, and Reduced Inequalities.
SFL’s Commitment to Social Impact and Inclusive Financing
SFL’s focus on social impact is evident through its financial instruments and services. These include financing to small road transport operators (SRTOs) and first-time borrowers (FTBs) at favorable rates, supporting underserved communities across India; providing suitable financial instruments and services for MSMEs; and offering affordable financing instruments like personal loans and gold loans to unbanked and underserved individuals, including women.
Executive Insights on the Successful Issuance
Umesh Revankar, Executive Vice Chairman of Shriram Finance Limited, expressed his satisfaction with the global investor community’s strong participation. He emphasized the company’s dedication to social impact, stating, “Social impact continues to remain a focus area for the company, and we are pleased to have received significant interest for our Social Bond. Social impact is similar to our priority sector with some strict exclusion and has a big interest from the international investor community.”
SFL’s latest bond issuance not only sets a new benchmark in the financial sector but also underscores the company’s commitment to sustainable and socially responsible financing.