Shapoorji and Pallonji Group is currently in negotiations with global investors, including BlackRock and JPMorgan Chase & Co, regarding a high-yield bond sale. This effort comes despite having received permission to delay repayment on existing debt. As India’s largest private credit borrower, the group is offering yields of at least 14 percent in hopes of raising up to $1 billion, according to anonymous sources involved in the discussions.
The terms of the bond sale are still being negotiated and may evolve. Additional global asset managers are reportedly in discussions to participate in the issuance of three-year dollar bonds. Some investors may also leverage financing facilities from banks such as Standard Chartered Plc.
This fundraising initiative is situated within the broader context of a refinancing effort for a group entity, Goswami Infratech Pvt, for which creditors recently granted an extension until June 30. Such circumstances make this bond sale unusual, as it is uncommon for firms that have recently delayed debt obligations to return to the bond market.
Investor interest in the proposed bond issuance nonetheless indicates a risk-reward balance. In a global credit market where double-digit returns are rare, some funds are willing to overlook immediate repayment risks. They hold the belief that the infrastructure conglomerate will be able to realize value from its 18.4 percent stake in Tata Sons—the holding company for India’s Tata Group—thereby stabilizing its financial standing.
Complications in refinancing have arisen due to delays in realizing value from this stake, along with broader market volatility. A representative from Shapoorji did not respond to a request for comment from Bloomberg, while spokespeople for JPMorgan and Standard Chartered declined to provide remarks. BlackRock has yet to respond to inquiries.
The proposed bond yield is positioned at the upper end for Indian issuers. For instance, in 2020, Lodha Developers International Ltd raised $200 million at an interest rate of 14 percent to avoid default, while Vedanta Resources issued $1 billion in three-year bonds at 13.875 percent later that year.
In addition to this offshore bond issuance, Shapoorji and Pallonji Group is also considering local borrowing options to address remaining refinancing needs, striving to finalize arrangements before the extended June deadline for Goswami Infratech.
