Shriram Finance plans $500 million bond buyback
The company proposes to buy back bonds maturing in April 2027 and April 2028 in an attempt to reduce borrowing costs and the buyback will be offered at a slight premium to the existing trading price, people familiar with the details said. The tend...
By Joel Rebello, ET Bureau | Updated:
Agencies
The company proposes to buy back bonds maturing in April 2027 and April 2028 in an attempt to reduce borrowing costs and the buyback will be offered at a slight premium to the existing trading price, people familiar with the details said.
Mumbai: Shriram Finance is likely to announce a $500-million bond buyback as early as next week as it takes advantage of free cash flows and reduced borrowing costs after a rating upgrade due to the purchase of a 20% stake in the local non-bank lender by Japan's largest bank, Mitsubishi UFJ Financial Group (MUFG), earlier this year, people familiar with the plans told ET.
The company proposes to buy back bonds maturing in April 2027 and April 2028 in an attempt to reduce borrowing costs and the buyback will be offered at a slight premium to the existing trading price, people familiar with the details said. The tender offer will be the first such buyback since MUFG purchased the stake earlier this year.
Read more: NSE IPO all set to open; co raises Rs 6,746 crore from anchor investors including LIC, Goldman Sachs
"The 2027 bond has an outstanding of $750 million while the 2028 bond has $500 million outstanding. By restricting the buyback to only $500 million the company wants to ensure that there is enough demand for the buyback," said a person aware of the details. Both these bonds are trading at a price of about $101 and the buyback will likely be priced at $101.25, this person said.
The 2027 bond is trading at a yield of 6.25% while the 2028 bond is trading at 6.12% yield. Shriram is aiming to save at least 75 basis points by buying back these bonds as these borrowings can be substituted with cheaper funds, people familiar with the details said. The company did not reply to an email seeking comment till press time.
In April, Fitch Ratings upgraded Shriram Finance's long-term foreign and local-currency rating by one notch to 'BBB-' from 'BB+' following the completion of MUFG's agreement to acquire a 20% stake in Shriram Finance.
"Shriram Finance's credit profile benefits from a one-notch uplift from its standalone credit profile, reflecting the strategic investment from a stronger long-term shareholder, in line with Fitch's non-bank financial institutions rating criteria," Fitch had said. MUFG purchased a 20% stake in Shriram Finance for ₹39,618 crore. The deal was completed in April 2026.
The company proposes to buy back bonds maturing in April 2027 and April 2028 in an attempt to reduce borrowing costs and the buyback will be offered at a slight premium to the existing trading price, people familiar with the details said. The tender offer will be the first such buyback since MUFG purchased the stake earlier this year.
Read more: NSE IPO all set to open; co raises Rs 6,746 crore from anchor investors including LIC, Goldman Sachs
"The 2027 bond has an outstanding of $750 million while the 2028 bond has $500 million outstanding. By restricting the buyback to only $500 million the company wants to ensure that there is enough demand for the buyback," said a person aware of the details. Both these bonds are trading at a price of about $101 and the buyback will likely be priced at $101.25, this person said.
The 2027 bond is trading at a yield of 6.25% while the 2028 bond is trading at 6.12% yield. Shriram is aiming to save at least 75 basis points by buying back these bonds as these borrowings can be substituted with cheaper funds, people familiar with the details said. The company did not reply to an email seeking comment till press time.
In April, Fitch Ratings upgraded Shriram Finance's long-term foreign and local-currency rating by one notch to 'BBB-' from 'BB+' following the completion of MUFG's agreement to acquire a 20% stake in Shriram Finance.
ADVERTISEMENT
"Shriram Finance's credit profile benefits from a one-notch uplift from its standalone credit profile, reflecting the strategic investment from a stronger long-term shareholder, in line with Fitch's non-bank financial institutions rating criteria," Fitch had said. MUFG purchased a 20% stake in Shriram Finance for ₹39,618 crore. The deal was completed in April 2026.
Too busy to trade in stocks? Invest in Mutual Funds with ET Money!
Bookmark or read stories offline -
Download ET Markets APP
Download ET Markets APP
ADVERTISEMENT
