Muthoot Finance has raised $650 million through US dollar-denominated bonds, with global investors showing firm demand for the debt issued by the domestic gold financing heavyweight.
The non-banking financial company raised the funds through bonds maturing in three years and nine months at a coupon rate – or rate of interest – of 7.125%. The funds will be used for onward lending and other activities that are allowed under the Reserve Bank of India’s external commercial borrowing guidelines.
“The overwhelmingly positive investor response has been highly encouraging and reaffirms investors’ confidence in our robust business model and financial stability. Muthoot Finance remains dedicated to serving our customers and contributing to India’s financial landscape,” George Alexander Muthoot, Managing Director of Muthoot Finance Ltd, said.
The order book for the issuance peaked at $1.8 billion with more than 170 international investors participating.
“With the latest round of US jobs data, market conditions have turned more conducive, and we believe that there is a dollar funding window which has opened up for Indian issuers, particularly strong credits like Muthoot Finance,” Sameer Gupta Head of India and SE Asia DCM, Deutsche Bank said to ET.
The German lender was a joint bookrunner to the issuance along with Standard Chartered Bank and DBS Bank, treasury executives said.
“On a hedged cost basis, the current rates look good, and we are hoping that a pipeline of issuers will build up,” Gupta said.
US bond markets had witnessed considerable volatility in April as stubbornly elevated inflation prints quashed expectations of rate cuts by the Federal Reserve. Yield on the 10-year US Treasury note jumped close to 30 basis points in April as investors rushed to pare bets of the Fed adopting easier monetary policy anytime soon. Bond prices and yields move inversely.
However, with data released last week showing lower-than-expected US jobs additions in April, bond yields declined sharply, creating more conducive conditions for companies to raise funds through debt. Sovereign bond yields are the benchmarks used globally to price corporate bonds.
