Shriram Finance Arm Raises $300 Mn Through 'First Of Its Kind' Social Bonds

India Vehicle Finance, established by Shriram Finance and based in Mauritius, has secured USD 300 million in what is described as a pioneering transaction by an Indian entity, as per a term sheet reviewed by Reuters.

The bonds, categorised as "social bonds," were issued to U.S. investors and priced at a coupon of 5.85 per cent late Monday, lower than the initial price guidance of around 6.15 per cent.

Although similar securitised transactions are routine for non-banking finance companies in the domestic rupee market, this marks the first instance of an Indian issuer employing dollar funds to subscribe to local asset-backed securities, noted two bankers involved in the deal, speaking on condition of anonymity due to confidentiality obligations.

Proceeds from social bonds are earmarked for addressing specific social issues like access to essential services, financial inclusion and job creation. In this case, the funds will support rupee-denominated pass-through certificates representing loans extended to small transport operators and first-time buyers from underserved communities, issued by another Shriram Group entity called Sansar Vehicle Finance Trust in December 2022.

Umesh Revankar, Executive Vice Chairman at Shriram Finance, emphasised the collateralised nature of the transaction, highlighting that the structured deal facilitated a rating equivalent to the sovereign for this transaction.

Barclays served as the global coordinator, with BNP Paribas, DBS Bank, Deutsche Bank, HSBC, JP Morgan and Standard Chartered acting as the lead managers and bookrunners for the deal.