Shriram Finance to raise $500 million overseas via ABS route

13 Dec 2023 , 11:19 AM

Shriram Finance is exploring new global funding possibilities for the first time, choosing for an international asset-backed securities (ABS) strategy to raise up to $500 million (about Rs 4,160 crore) in mid-January 2024. The issue is expected to be priced at less than 9%.

According to persons familiar with the subject, the non-banking financial corporation (NBFC) intends to securitize a portion of its loan portfolio and then sell it to overseas investors, with major global banks expected to meet investors in Hong Kong and Singapore this week to finalise the transaction.

According to them, the banks engaged in the deal include Barclays, HSBC, JP Morgan, and Deutsche Bank.

The funds are anticipated to be raised under the Reserve Bank of India’s external commercial borrowing framework (ECB), which permits non-bank financing businesses to raise up to $750 million in foreign capital each year.

Given the added expense of using an extensive ABS funding model, Shriram Finance would like the transaction pricing to reflect the benefits of enhanced ratings, according to the persons.

The benefit to the issuer would be an increase in rating metrics with the appropriate amount of credit enhancement. Shriram Finance currently has a ‘BB’ rating.

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