Muthoot Finance raises $550 million from international bond markets

Muthoot Finance Ltd, the largest gold loan company in India, has successfully priced a 550 million dollars fixed-rate senior secured note issuance for a three-and-a-half-year tenor at 4.4 per cent.

The company had placed 450 million dollars for a three-year tenor at 6.125 per cent in October last year. The proceeds of the issue will be used for permitted purposes including onward lending in accordance with RBI's external commercial borrowings guidelines and other applicable laws.

The transaction was officially launched on February 18 following which the company engaged several investors during a series of fixed income investor calls in Hong Kong, Singapore, London and the United States.

On the back of high-quality feedback, said the company, the transaction was launched with an initial pricing guidance of 4.75 per cent area on February 20. Following a strong order book momentum supported by high-quality real money investors, it was able to tighten pricing by 35 basis points to 4.4 per cent.

The final order book was in excess of 1.6 billion dollars 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 United States with 89 per cent investments from fund managers, 6 per cent from private banks, 3 per cent from insurance and banks, and 2 per cent from others.

The bonds will be listed on the international securities market of the London Stock Exchange.

Muthoot Finance has issuer rating of long-term rating of BB plus 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.

Chairman M G George Muthoot said the response from international bond investors in the 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," he said.

"This is a recognition of India's non-banking finance sector. This fundraise will enable us in further diversifying and strengthening our sources of funding. We look forward to strengthening our partnership with global investors," he said in a statement.

Muthoot Finance has a network of 4,536 branches across 23 states, the national capital territory of Delhi and five union territories in India. It employs 25,149 people and has loan assets of Rs 38,498 crore. The profit after tax for nine months ending December 31 totalled Rs 2,191 crore.

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