Gold loan company Muthoot Finance raises USD 550 million at 4.40 per cent

KOCHI: Muthoot Finance Ltd, one of the largest gold loan companies in India, has successfully raised $ 550 million from overseas investors through a fixed-rate senior secured note with a tenure of 3.5 years at 4.40 per cent rates.

The rate is better than its fundraising in October 2019 when the Kochi-based NBFC had successfully collected $ 450 million for a 3-year-tenor at 6.125 per cent rate.

The proceeds of the issue will be used for permitted purposes including onward lending in accordance with RBI’s ECB Guidelines and other applicable laws, said Muthoot in a release here.

The transaction was officially launched on Feb 18, 2020, following which the company engaged several investors during a series of fixed income investor calls in Hong Kong, Singapore, London, and US. On the back of high-quality feedback, the transaction was launched with initial pricing guidance of 4.750 per cent range on February 20. “Following a strong order book momentum supported by high-quality real money investors, the Company was able to tighten pricing by 35bps to 4.400 per cent,” the release said.

 The final order book was in excess of $ 1.6 billion with an oversubscription of more than 2.9 times. The transaction witnessed 38 per cent participation from Asia, 13 per cent from Europe and 50 per cent from the US; with 89 per cent investments from fund managers, 6 per cent from private banks, 3 per cent from insurance & banks and 2 per cent from others.

 The bonds will be listed on the International Securities Market of the London Stock Exchange.

 The company had issuer rating of Long Term rating of ‘BB+’ with ‘Stable’ Outlook by Fitch Ratings, ‘BB’ with ‘Stable’ Outlook by S&P Global Ratings and ‘Ba2’ Corporate Family Rating with ‘Stable’ Outlook by Moody’s Investor Service.

 Deutsche Bank and Standard Chartered Bank acted as the Joint Global Coordinators and Joint Book Runners for the issue.

M.G.George Muthoot, Chairman, Muthoot Finance said: “The response from international bond investors in our second issue is quite overwhelming. We are glad to know that global investors have understood our unique credit story acknowledging our long track record in the gold loan business. This is a recognition of India’s NBFC sector. This fundraiser will enable us to further diversifying and strengthening our sources of funding. We look forward to strengthening our partnership with global investors.”