The loans have maturities of three to five years and are backed by major companies such as Britain’s HSBC, Japan’s MUFG, SMBC, the World Bank Group’s IFC, Singapore’s DBS Bank, France’s BNP Paribas, Standard Chartered Bank and First Abu Dhabi Bank. Financial institutions are involved. A series of transactions.
A person familiar with the details of the transaction said, “The three-year loan is approximately $900 million, the largest in this transaction.This is a tri-currency loan, with $600 million in dollars and the remainder split almost equally between dirhams and euros. It will be divided,” he said. . “Separately, MUFG has provided $275 million in a three-and-a-half-year loan and IFC has provided approximately $10 million in a five-year loan, both of which are bilateral transactions.”
No comments were immediately available from overseas banks or multilateral organizations.
Changes in point standards
Non-banking financial companies (NBFCs) have sought to diversify their funding options this fiscal year following tightened regulations by the Reserve Bank of India (RBI).
Foreign currency borrowing is a good option for these lenders to diversify their sources of funding with favorable interest rates and long borrowing periods as bank funding dries up with the Reserve Bank of India expressing concern over banks’ increasing exposure to the sector. becomes.
The price of the three-year, $900 million loan is 200 basis points (bps) above the three-month secured overnight financing rate (SOFR), which currently trades at 4.76%; It will be. One basis point is 0.01 percentage point.
The $900 million loan is likely to be syndicated among other international banks in January or February, the people cited said.
Executive Vice Chairman Umesh Revankar confirmed that Shriram Finance is in the final stages of raising these loans.
Separately, Japan’s largest bank, MUFG, has loaned $275 million at 205 bps above the three-month SOFR rate, meaning an interest rate of 6.81%. MUFG’s financing is the largest transaction ever undertaken by a single financial institution.
IFC is pricing its loans 210 bps above SOFR, or about 6.86%, another person said.
“This loan deal is a record in terms of size of loan taken by an NBFC from India. From Shriram’s point of view, it will help diversify its sources of funding,” the second person said. “The money will be used for financing operations.”
Shriram Finance, known for commercial vehicle (CV) financing, is now diversifying its lending facilities to include lending to MSMEs. As of September, CVs and passenger cars together accounted for 67% of the company’s portfolio of Rs 2.33 billion.
