Bajaj Finance Eyes $500M Loan

13 Aug 2024 , 12:55 PM

India’s largest non-banking finance company by market value is to borrow up to $500 million offshore, according to news reports, becoming the latest shadow financier to seek global capital after stiffer laws limited local choices.

Bajaj Finance Ltd. is negotiating the facility’s terms with a group of at least four foreign banks, according to news reports. The debt’s tenor might range from three to five years, with pricing tied to the Secured Overnight Financing Rate – a standard benchmark for Asian deals, they noted.

The money will be raised through the Reserve Bank of India’s external commercial borrowing channel, with interest rates capped at 500 basis points over the benchmark rate.

A number of domestic shadow financiers are joining the global credit market after the RBI directed banks to increase consumer loan buffers to reduce hazardous lending. The rule change has made it difficult for these lenders to obtain bank loans, forcing them to look for alternatives in the credit market.

This year, shadow financiers have borrowed abroad, including gold loan providers Manappuram Finance Ltd. and Muthoot Finance Ltd., as well as Piramal Capital & Housing Finance Ltd. HDB Financial Services Ltd., a unit of India’s largest lender by market capitalisation, is in the process of borrowing foreign funds.

Bajaj Finance, a subsidiary of one of India’s oldest conglomerates, provides loans to purchase two- and three-wheelers made by group firm Bajaj Auto Ltd, as well as consumer electronics. The top-rated organisation also offers personal and mortgage loans.

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