India Vehicle Finance raises $300 million via social bonds
MUMBAI (Reuters) - Mauritius-based foreign portfolio investor India Vehicle Finance has raised $300 million to invest into securitisation issued by Shriram Finance, in a 'first of its kind bond deal' by an Indian issuer, according to a term sheet seen by Reuters.
The bonds, which come under the "social bonds" category and were issued to U.S. investors, were priced at a coupon of 5.85% late on Monday, below the initial guidance of around 6.15%.
Proceeds from social bonds are used to address or mitigate specific social issues such as access to essential services, financial inclusion and employment generation, among others.
"We regularly do this kind of a securitised structure in the domestic market but we wanted to diversify our funding avenues and investors base in the offshore market so we decided to come up with this offering," said Parag Sharma, joint managing director and chief financial officer of Shriram Finance.
The deal is the first of its kind from an Indian issuer as dollar funds are being used to subscribe to local asset-backed securities, two bankers to the deal said.
They requested anonymity as they are not authorised to speak to the media.
"This is a completely collateralised transaction, and the structured deal has helped us get a rating equivalent to the sovereign for this deal," said Umesh Revankar, executive vice chairman at Shriram Finance.
The funds will be used to subscribe to rupee-denominated pass-through certificates that denote the ownership of an underlying pool of assets - loans given to small transport operators and first-time buyers from under-served communities.
"We get the benefit of credit enhancement as the underlying assets are secured, which resulted in lower pricing than our regular dollar bond issue which happened in January," Sharma added.
In January, the company raised $750 million via issuance of U.S. dollar-denominated bonds maturing in three years and three months at a semi-annual coupon of 6.6250%.
Shriram Finance may look at tapping the offshore market again with the similar structured deal based on investors appetite, Sharma said.
(Reporting by Bhakti Tambe and Scott Murdoch; Editing by Janane Venkatraman and Varun H K)
