Fitch Ratings has assigned Manappuram Finance Limited
's (MFIN, BB-/Stable) USD300 million 5.9% senior secured notes due 2023, which carry a fixed-rate coupon payable semi-annually, a final rating of 'BB-'.
This follows the receipt of final documentation conforming to information previously received. The final rating is in line with the expected rating assigned on January 6, 2020.
The notes are secured by MFIN collateral, which includes all the issuer's standard assets, stage-1 and stage-2 assets, and excludes all non-performing assets or stage-3 assets. The notes are also subject to maintenance-based covenants that require MFIN to ensure the security coverage ratio is at or greater than 1x at all times.
The issuer is using the net proceeds of the notes for onward lending and general corporate purposes in accordance with approvals granted by the Reserve Bank of India and directions on external commercial borrowings.
Key Rating Drivers
MFIN's US dollar-denominated senior secured notes are rated at the same level as the company's Long-Term Foreign-Currency Issuer Default Rating (IDR), in accordance with Fitch's rating criteria.
Fitch regards the senior secured notes as an obligation whose non-payment would best reflect uncured default of the issuer, as most of MFIN's debt is secured. The company can issue unsecured debt in the overseas market, but such debt is likely to constitute a small portion of its funding and thus cannot be viewed as its primary financial obligation.
The rating on the notes will move in tandem with MFIN's Long-Term Foreign-Currency IDR. MFIN's IDR is sensitive to rising leverage (if debt/equity breaches 5x). Post issue of the notes, MFIN's leverage is not expected by Fitch to increase materially from current levels (3.6x at End-September 2019).