On Monday, Muthoot Finance has commenced pricing of its three-year dollar-denominated bonds with the initial price target on the paper coming in at 6.375%.

“The firm could be looking to raise anywhere between $300-450 million. The final price is likely to come down fairly from the initial guidance of 6.375%,” said a source.

S&P Global Ratings has assigned the ‘BB’ long-term issue rating to the proposed issue by Muthoot Finance. Meanwhile, Moody’s Investors Service has assigned a first-time Ba2 corporate family rating (CFR).

Moody’s explained that despite the volatile non-performing loans (NPLs) performance, the underlying credit costs have remained fairly low, at about 0.7% of consolidated gross loans in the past three years.

“Furthermore, the company incurs minimal losses on gold loans that turn into NPLs that are ultimately auctioned. Based on auction data over the past five years, the company recovered the entire principal amount of the loans outstanding, and the resultant losses were only limited to the loss of interest,” Moody’s explained.

Indian entities are making a beeline to tap the foreign currency bond market with at least six firms having raised funds since the beginning of September. Bond dealers say the issuances are on their way to hit a record high.

Recently, Bharti Airtel’s Mauritius-based wholly-owned arm Network i2i raised $750 million via perpetual bonds at 5.65%. Also, firms like Adani Green Energy, JSW Steel, Azure Power Solar Energy, Power Finance Corporation and ReNew Power had hit the foreign currency bond market.

It is noteworthy that the US treasury yield, which acts as the benchmark for the pricing of most of these bonds, has come down significantly since the beginning of the year. The 10-year US treasury yield has come down from 2.78% during the earlier part of the year to 1.78% at present.

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Khaitan & Co advised the Managers - Standard Chartered Bank and Deutsche Bank AG Singapore branch - to the issue led by a team of Partner Manisha Shroff, Principal Associate Rolwine Alva, Associate Enakshi Jha, and Associate Akshay Ferdinand represented the client on the transaction with assistance from Associate Kratika Parashar on closing aspects.

AZB & Partners acted for Muthoot Finance led by Partners Srinath Dasari and Richa Choudhary, and Senior Associates Shantanu Singh and Sweta Ananthanarayanan.

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