Muthoot Finance Raises $400 Mn From Global Investors

Muthoot Finance, an Indian gold loan company has raised USD 400 million (approximately Rs 3350 crore) through the issuance of senior secured notes (notes) under its Global Medium Term Note Program of USD 2 billion in compliance with external commercial borrowings (ECB) guidelines of Reserve Bank of India (RBI)

The coupon for the notes has been set at 6.375 per cent p.a. and is issued with a door-to-door maturity of 4.5 years and an average period of four years.

The order book peaked at over USD 1.3 billion with an oversubscription of 3.9x and final participation from 125+ investors across the globe. The bonds were rated by International Credit Rating agencies S&P and Fitch with BB/Stable rating. The issue was in compliance with Rule 144A under the U.S. Securities Act of 1933.

The funds raised will be used for onward lending and other activities permitted under External Commercial Borrowing guidelines of the RBI, the company stated in a press release. The notes are listed in NSE IX, Gift City, Gujarat.

Notably, Deutsche Bank and Standard Chartered Bank were the arrangers and dealers for the issuance. 

Muthoot Finance had previously raised USD 450 million in 2019 and USD 550 million in 2020 which was repaid on respective due dates in 2022 and 2023 respectively. In the current financial year, the company had already raised USD 750 million under the same route for a period of 3.75 years at a coupon of 7.125 per cent.

George Alexander Muthoot, Managing Director (MD), Muthoot Finance said, “This fundraise of USD 400 million, as a part of the USD 2 billion Global Medium Term Note program, will further strengthen our partnership with global investors. We saw a great response from global investors on the back of our resilient performance, commitment to our customers, and a successful track record of gold loan business in India."

Muthoot stated that this also helped us in reducing the coupon rate on the Notes to 6.375 per cent vis-à-vis the earlier issuance at a coupon rate of 7.125 per cent even though the period has increased to 4.5 years compared to 3.75 years for the previous issue. "The issue will help the company to achieve higher loan disbursements as well as further diversify the sources of its borrowing and widen the investor base," he added.