Now Reading: Cholamandalam plans Rs 2,000 crore perpetual bond sale
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Cholamandalam plans Rs 2,000 crore perpetual bond sale
Cholamandalam Investment and Finance Co., one of India's largest shadow lenders, plans to raise up to Rs 2,000 crore through a perpetual bond sale, according to people familiar with the matter. The…
Cholamandalam Investment and Finance Co., one of India's largest shadow lenders, plans to raise up to Rs 2,000 crore through a perpetual bond sale, according to people familiar with the matter. The bonds, callable after 10 years, would be the largest such issuance by a private financier in the country.
The company plans to seek bids as early as next week, though the coupon rate and other details are yet to be finalised. If completed, the sale would match the largest perpetual debt ever sold by an Indian financier, state-run REC Ltd raised Rs 2,000 crore via such bonds in April 2023.
Perpetual bond issuances by non-bank firms have slumped 90 per cent to Rs 460 crore so far this year. The sale will help Cholamandalam boost its capital buffer to sustain double-digit credit growth, its loans rose 22 per cent year-on-year in the June quarter and profit jumped 46 per cent to Rs 1,650 crore.
Indian Opinion Analysis
Perpetual bonds are counted as equity-like capital under RBI norms, helping non-bank lenders expand their loan books without immediate repayment pressure. Cholamandalam's plan comes as regulatory scrutiny tightens on shadow banks after the liquidity crisis at some peers in 2023. The company's Rs 1.6 lakh crore market cap and strong profit growth give it room to price the debt competitively. The success of the issuance will signal investor appetite for high-yield perpetual paper in a market where only the strongest non-banks dare to tap this instrument. The bid date next week will show whether buyers accept the risk of bonds that can skip coupon payments if capital falls below minimum thresholds.
Source: thehindubusinessline.com
This brief was synthesised by AI from the source linked above.
