HSBC to Lead Arrangement of Shriram Finance’s $150 Million Social Loan
Shriram Finance, India’s second-largest independent non-bank lender in terms of advances, has revealed its intention to raise a minimum of $150 million through a social loan. The loan will be arranged exclusively by HSBC. It is set to have a three-year tenor, with its pricing expected to be approximately 200 basis points above the Secured Overnight Financing Rate (SOFR), as informed by the UK-based bank.
To clarify, one basis point represents 0.01 percentage point. Additionally, the loan will come with a greenshoe option, also lasting three years.
Chetan Joshi, the managing director and head of debt finance for India at HSBC, expressed optimism about the transaction’s timing. Given the current positive sentiment towards Indian financial institutions, Shriram’s recent credit rating upgrade, and the social loan structure, they anticipate a favorable response from the bank loan market.
HSBC will be conducting roadshows to lenders in Singapore, Taiwan, and the Middle East to promote the loan opportunity.
The social loan has received certification from Sustainanalytics, a Netherlands-based organisation, making it compliant with Environmental, Social, and Governance (ESG) standards. Moreover, the loan adheres to the norms set by the Reserve Bank of India for external commercial borrowing.
Social loans, which support projects dedicated to social causes, are still relatively new in the Indian non-banking financial company (NBFC) sector.
Parag Sharma, the joint managing director and CFO at Shriram Finance, expressed pride in their ability to execute international capital market access transactions, showcasing the trust placed in them by both bankers and rating agencies.
The announcement of the social loan coincides with the recent upgrade of four Indian financial sector entities, including Shriram Finance, by the global rating agency Standard & Poor’s. The rating agency cited operational improvements and promising economic prospects as the reasons behind the rating upgrade. Shriram Finance’s rating was raised from ‘BB-‘ to ‘BB’.
