Piramal Capital raises $300 million through overseas sustainability bonds

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Piramal Capital and Housing Finance has raised $300 million from the overseas market through sustainability bonds, and the non-banking finance company intends to raise its international borrowings to 10 per cent of its liabilities from less than a per cent now, a top official told businessline.

“We have opened the gates to international issuances. We have issued to 113 investors. Now that we have greater name familiarity and the bonds are traded in the market, it’ll be a lot easier for us to go out there and issue future bonds,” said Managing Director, Jairam Sridharan. The current issuance will take the share of overseas borrowing to 4 per cent of the total.

The US-dollar denominated maiden overseas bond issuance by the NBFC, structured as fixed rate Senior Secured Sustainability Bonds at a yield of 7.95 per cent and a tenor of 3.5 years, was lapped up by overseas investors, with a demand of 4x at $1.3 billion. Around 88 per cent of the subscribers were asset managers, 5 per cent were sovereign wealth funds and insurance companies, and the remainder from banks. In terms of geography, 81 per cent of the funds were raised from Asia and the rest from the Middle East.

The bonds were rated BB- from S&P, and Moody’s with stable outlook.

The proceeds from the issue will be used to fund impactful social projects, including affordable housing, MSME business loans, priority sector loans, microfinance, and other eligible products.

Sridharan said it was a strategic move to issue bonds overseas,  which would help the company develop a reputation in the international markets and become a familiar issuer for overseas bond subscribers.

“The international markets today are more expensive than Indian markets for sure. The borrowing in India is cheaper, no doubt about that. If you were to tactically look at how to optimize cost of borrowing, then you will never borrow abroad. You will borrow only in India. However, this is not tactical, its strategic,” he explained.

Another reason to borrow overseas was to diversify sources of debt capital, partly due to the nudge from the Reserve Bank of India for NBFCs to look for sources of finance outside banks, which are facing funding constraints due to slowing deposit growth.