Hinduja Leyland Finance eyes $300-500 million through debut dollar bonds

So far in FY25 (up to October), Indian corporates have raised around Rs 35,000 crore from overseas investors through bonds

Hinduja Leyland Finance, the financial services arm of Ashok Leyland, is planning to raise $300-500 million through debut issuance of dollar bonds by the end of the current financial year (FY25), its Managing Director (MD) & CEO Sachin Pillai said on Friday.

 

They plan to raise the funds through bonds maturing in three to five years.

 

“We plan to raise $300 million-$500 million through bonds from overseas which is a first for us. The tenure will be 3 years-5 years. We have not appointed arrangers so far, but we are in touch with a few people. We have also not received a rating for the issue, but domestically we are rated AA+,” said Pillai.

 

Promoted by Ashok Leyland, Hinduja Leyland Finance is a part of the Hinduja Group and is one of India’s leading vehicle finance non-banking finance companies (NBFCs) with a focus on urban and semi-urban markets.

 

During the ongoing financial year (up to October), Indian corporates have raised around Rs 35,000 crore from overseas investors through bonds.

 

Some of the major issuers included Manappuram Finance, Samvardhana Motherson International, Piramal Capital, and REC Ltd.

 

In FY24, domestic companies had raised a little over Rs 45,000 crore from overseas investors, with major issuers being State Bank of India, HDFC Bank, Adani Green Energy, and IRB Infrastructure, according to data from Primedatabase.

 

Dollar bond issuances by NBFCs have been increasing following the Reserve Bank of India (RBI)’s decision to raise the risk weights for bank funding to the sector. As a result, NBFCs are increasingly turning to domestic and international debt capital markets, as well as securitization, to meet their funding needs and drive growth.

 

With interest rates softening, lower hedging costs, and a growing appetite for high-yield paper, Indian companies stepped up activity in the overseas bond market. Additionally, the spread for Indian papers has compressed substantially in recent weeks. India’s largest lender SBI, earlier this month, raised $500 million via five-year bonds from international investors through its London branch at a very fine pricing. The bonds have been priced 82 basis points (bps) above the US Treasury. One basis point is one-hundredth of a percentage point.

 

Earlier this week, Vedanta Resources, the parent company of India's Vedanta, raised $800 million from global investors through a bond issuance. The offering included two tranches: one for $300 million in bonds with a 10.25 per cent coupon, maturing in 2028, and the other for $500 million in bonds with an 11.25 per cent coupon, maturing in 2031.

 

After US justice department, in a report, charged Gautam Adani and others with $250 million bribery, there has been some volatility in the Indian papers, however, experts have suggested that while there may be some short-term implications for Indian companies seeking overseas funds, India Inc. will likely continue to tap the dollar bond market in the long run, given the strong demand for high-yield papers.