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Shriram Finance Eyes $500M Bond Buyback Next Week
17 Sep
Summary
- Shriram Finance plans a $500 million bond buyback possibly next week.
- The buyback aims to reduce borrowing costs using free cash flows.
- MUFG's 20% stake earlier this year prompted a rating upgrade for Shriram.
Shriram Finance is preparing to launch a $500 million bond buyback, anticipated as early as next week. This initiative leverages the company's available free cash flows and a more favorable borrowing environment.
The proposed buyback will focus on bonds maturing in April 2027 and April 2028. These offerings will be priced at a slight premium to their current trading values. This tender offer marks the first such action since Mitsubishi UFJ Financial Group (MUFG) acquired a substantial stake.
MUFG's investment of 20% in Shriram Finance earlier this year led to a significant credit rating upgrade. Fitch Ratings elevated Shriram Finance's long-term foreign and local-currency rating to 'BBB-' from 'BB+', citing the strategic benefit of a stronger shareholder.
The company seeks to reduce its overall borrowing expenses by approximately 75 basis points. This saving is achievable by replacing existing, higher-cost borrowings with more economical funding options. The 2027 bond has $750 million outstanding, while the 2028 bond has $500 million outstanding.
