Shapoorji Pallonji Finance eyes bonds to raise funds in early FY27

Shapoorji Pallonji Finance plans to tap the bond market in early FY27 but says high borrowing costs make a rating upgrade essential

Shapoorji Pallonji Finance (SP Finance) plans to raise funds via debt in the first week of the next financial year and would look for a rating upgrade before it, a senior company official told Business Standard.

 

The size and tenure of the proposed bond issue are yet to be finalised.

 

With prevailing market conditions implying a borrowing cost of nearly 18 per cent, the executive said the company “cannot afford” to raise money at current levels and is therefore prioritising a credit rating upgrade to lower its cost of funds.

 

The long-term objective is to secure a sub-10 per cent coupon, a target the senior executive admitted remains some distance away given the group’s existing debt structure and the high-yield nature of its recent issuances.

 

SP Finance’s long-term debt instruments and bank facilities were downgraded to ‘CRISIL BBB+/Stable’ in 2024, from their earlier ‘A–/Stable’ rating.

 

The planned fundraising comes against the backdrop of one of the largest and longest debt-refinancing programmes undertaken by an Indian conglomerate.

 

The SP Group’s liabilities had risen sharply by 2020 due to working-capital pressures, project delays and pandemic-related disruptions.

 

Its flagship, Shapoorji Pallonji & Company Pvt Ltd (SPCPL), entered a one-time restructuring and exited the recast in 2022 after repaying ₹12,450 crore, supported by promoter equity infusions and asset sales, including divestments in renewable energy and consumer services.

 

By the end of FY22, SPCPL had reduced external debt by roughly ₹13,500 crore, with further deleveraging targeted in subsequent years.

 

Despite these efforts, refinancing needs have remained substantial.

 

In 2021, promoter entity Sterling Investments raised $2.6 billion through high-cost debentures backed by its stake in Tata Sons. In 2023, group company Goswami Infratech mobilised about ₹14,300 crore via zero-coupon bonds at an effective yield of roughly 18.75 per cent, again secured against Tata Sons shares and infrastructure assets.

 

As traditional bank funding became tighter and several maturities approached, the group turned to global private credit investors.

 

In 2025, it completed a $3.34 billion three-year NCD issuance at a yield of 19.75 per cent, one of the largest private-credit financings by an Indian corporate. The group is now preparing for another refinancing exercise of about ₹22,000 crore in early 2026 to retire some of its costliest obligations.