Bajaj Finance in talks to borrow $500 million offshore borrowing
Mumbai: India's largest non-banking finance company by market value is planning to raise up to $500 million through offshore borrowing, Bloomberg reported, citing sources who requested anonymity due to the private nature of the talks.
Bajaj Finance Ltd. is in discussions with at least four foreign banks to negotiate the terms of a loan facility, according to sources who requested anonymity due to the private nature of the talks.
This move comes as the latest example of a shadow financier turning to global funding after stricter regulations constrained domestic financing options, according to the report.
Bajaj Finance Ltd. is in discussions with at least four foreign banks to negotiate the terms of a loan facility,
The debt is expected to have a tenor of three to five years, with pricing linked to the Secured Overnight Financing Rate (SOFR), a common benchmark in Asia, according to the report.
The funds will be raised through the Reserve Bank of India's external commercial borrowing route, which limits the interest rate to 500 basis points above the benchmark rate.
Several local non-banking financial companies (NBFCs) are turning to the global credit market after the RBI asked banks to increase buffers for consumer loans, making it harder for these lenders to secure bank loans. This has led them to seek alternative funding sources in the credit market.
Among those borrowing abroad this year are gold loan providers Manappuram Finance Ltd. and Muthoot Finance Ltd., as well as Piramal Capital & Housing Finance Ltd. HDB Financial Services Ltd., a unit of India's largest bank by market value, is also in the process of raising foreign capital.
Bajaj Finance, a subsidiary of one of India’s oldest conglomerates, provides loans for the purchase of two- and three-wheelers manufactured by its group company Bajaj Auto Ltd., as well as consumer appliances. The top-rated company also offers personal and mortgage loans.
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