Indian shadow bank Shriram Finance gets record $1.28 billion loan
ECONOMY & POLICY

Indian shadow bank Shriram Finance gets record $1.28 billion loan

Shriram Finance Ltd. is reported to have borrowed $1.28 billion in a multi-currency social loan, marking the largest offshore facility ever undertaken by an Indian shadow lender. According to a press release issued by Shriram, the deal is divided across the dollar, euro, and dirham. Sources familiar with the transaction, who wished to remain anonymous, indicated that the tenors in the multi-tranche deal range from three to five years. This loan adds to the surge of offshore debt sales by Indian shadow lenders this year, a trend prompted by the Reserve Bank of India's tightening of rules in November 2023. These regulations made it more challenging for the sector to obtain local currency bank loans. Markets, however, have absorbed the new debt supply, attracted by comparatively higher yields and the opportunity to diversify portfolios away from high-yielding Chinese debt. Indian shadow banks, which play a crucial role in the country’s fast-growing economy, provide capital to individuals and businesses unable to access traditional sources of funding. These lenders are involved in a variety of sectors, including infrastructure and small businesses owned by low-income borrowers. Recently, several Indian shadow banks, such as Annapurna Finance Pvt and Credila Financial Services Ltd., have tapped the offshore loan market, with many being first-time borrowers. Shriram itself had already issued a $468.4 million loan and two dollar bonds totaling $1.25 billion earlier in the year. Shriram’s latest loan consists of a $1.2 billion dollar tranche, a $75 million dirham tranche, and a $52 million euro tranche. The loan also includes a $250 million portion from the International Finance Corporation (IFC), with the remaining funds coming from banks, some of which would be syndicated. Among the banks involved in the deal are BNP Paribas SA, CTBC Bank Co., DBS Group Holdings Ltd., Deutsche Bank AG, Emirates NBD Bank PJSC, First Abu Dhabi Bank PJSC, HSBC Holdings Plc, IFC, Kotak Mahindra Bank Ltd., Mitsubishi UFJ Financial Group Inc., SMBC Nikko Securities Inc., and Standard Chartered Plc. Bloomberg-compiled data reveals that Shriram’s loan surpasses the $1.2 billion deal made by state-owned India Infrastructure Finance Co. in 2009.

Shriram Finance Ltd. is reported to have borrowed $1.28 billion in a multi-currency social loan, marking the largest offshore facility ever undertaken by an Indian shadow lender. According to a press release issued by Shriram, the deal is divided across the dollar, euro, and dirham. Sources familiar with the transaction, who wished to remain anonymous, indicated that the tenors in the multi-tranche deal range from three to five years. This loan adds to the surge of offshore debt sales by Indian shadow lenders this year, a trend prompted by the Reserve Bank of India's tightening of rules in November 2023. These regulations made it more challenging for the sector to obtain local currency bank loans. Markets, however, have absorbed the new debt supply, attracted by comparatively higher yields and the opportunity to diversify portfolios away from high-yielding Chinese debt. Indian shadow banks, which play a crucial role in the country’s fast-growing economy, provide capital to individuals and businesses unable to access traditional sources of funding. These lenders are involved in a variety of sectors, including infrastructure and small businesses owned by low-income borrowers. Recently, several Indian shadow banks, such as Annapurna Finance Pvt and Credila Financial Services Ltd., have tapped the offshore loan market, with many being first-time borrowers. Shriram itself had already issued a $468.4 million loan and two dollar bonds totaling $1.25 billion earlier in the year. Shriram’s latest loan consists of a $1.2 billion dollar tranche, a $75 million dirham tranche, and a $52 million euro tranche. The loan also includes a $250 million portion from the International Finance Corporation (IFC), with the remaining funds coming from banks, some of which would be syndicated. Among the banks involved in the deal are BNP Paribas SA, CTBC Bank Co., DBS Group Holdings Ltd., Deutsche Bank AG, Emirates NBD Bank PJSC, First Abu Dhabi Bank PJSC, HSBC Holdings Plc, IFC, Kotak Mahindra Bank Ltd., Mitsubishi UFJ Financial Group Inc., SMBC Nikko Securities Inc., and Standard Chartered Plc. Bloomberg-compiled data reveals that Shriram’s loan surpasses the $1.2 billion deal made by state-owned India Infrastructure Finance Co. in 2009.

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