NBFCs continue to raise short-tenor bonds

Credit: REUTERS/FRANCIS MASCARENHAS

Indian non-banking financial companies, including CreditAccess Grameen and Shriram Housing Finance are raising short-tenor bonds.

MUMBAI, Sept 21 (IFR) - Indian non-banking financial companies, including CreditAccess Grameen and Shriram Housing Finance are raising short-tenor bonds.

Credit Access Grameen, rated A+ by Icra, is planning to raise Rs1bn (US$14m) from 18-month bonds at 9.15%, according to market sources. Shriram Housing Finance raised Rs1bn from 18-month bonds at 8.15%. Crisil has assigned AA- rating to the notes. Annapurna Finance printed Rs700m from six-year notes at 11.7%. The notes have a put and call option on September 18, according to a filing on the exchanges.

The short-term offerings come as loan delinquencies at India's non-bank lenders are likely to rise up to 250bp in the year ending March 2021 due to vulnerability in borrower cash flow, according to a Crisil Ratings note on September 18.

The restructuring scheme for micro, small and medium enterprises and personal loans announced by the central bank may limit the rise in non-performing assets.

"Nevertheless, NBFCs are expected to be prudent in offering restructuring selectively to deserving accounts and not in a blanket manner," said Krishnan Sitaraman, senior director at Crisil in a note.

In August, the Reserve Bank of India announced a one-off window allowing banks to restructure loans hit by the Covid-19 pandemic up to two years without recognising them as bad debts, in a move designed to head off a longer-term spike in non-performing assets.

Several lower rated non-bank lenders have managed to raise short-term funds from the bond market under a partial credit guarantee scheme announced by the government.

(Reporting by Krishna Merchant; Editing by Steve Garton)

((Krishna.Merchant@thomsonreuters.com; +65 64174544;))

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