Indian shadow bank Shriram Finance gets record $1.28 billion loan #IndiaFinance

Shriram Finance Ltd. has borrowed $1.28 billion in a multi-currency social loan, notching the biggest ever offshore facility by an Indian shadow lender.

The non-bank financial company’s deal is split across the dollar, euro and dirham, Shriram said in a press release Wednesday. The tenors in the multi-tranche deal range from three to five years, people familiar with the matter said, asking not to be identified.

The loan adds to this year’s rush of offshore debt sales by Indian shadow lenders after the nation’s central bank tightened rules in November 2023 that made it increasingly difficult for the sector to obtain local currency bank loans. Markets have so far sufficiently absorbed the new debt supply as it offers investors comparatively elevated yields and diversifies their portfolios away from high-yielding Chinese debt.

Indian shadow banks play a significant role in the fast-growing economy, providing capital access to individuals and companies that are unable to tap traditional sources. In providing credit to sectors that have been underserved, the lenders have exposures in a wide range of projects from infrastructure to low-income borrowers’ small businesses.

Several Indian shadow banks, including Annapurna Finance Pvt to Credila Financial Services Ltd., have tapped the offshore loan market recently, most of them being first-time borrowers. Shriram has already sold a $468.4 million loan and two dollar bonds totaling $1.25 billion earlier this year.

Shriram’s latest loan transaction consists of a $1.2 billion dollar tranche, $75 million dirham tranche and $52 million euro tranche, it said in the statement. The facility has a $250 million portion from International Finance Corp. and the remaining funding from banks, part of which would be syndicated, the people said. BNP Paribas SA, CTBC Bank Co., DBS Group Holdings Ltd., Deutsche Bank AG, Emirates NBD Bank PJSC, First Abu Dhabi Bank PJSC, HSBC Holdings Plc, IFC, Kotak Mahindra Bank Ltd., Mitsubishi UFJ Financial Group Inc., SMBC Nikko Securities Inc. and Standard Chartered Plc are the lenders that participated in the deal, according to the release.

Shriram’s loan amount tops state-owned shadow lender India Infrastructure Finance Co.’s $1.2 billion deal in 2009, according to Bloomberg-compiled data.