Poonawalla Fincorp to issue multiple-tenor bonds, bankers say

What happened

Poonawalla Fincorp plans to raise up to 20 billion rupees, or about $210.12 million, including a greenshoe option of 10 billion rupees, by selling three-year and four-year bonds, three bankers said. The three-year note pays a 9% coupon, while the four-year note is a zero-coupon bond.

Confirmed

Global impact / market context

The borrowed money gives the non-banking financial company, which lends but does not take deposits like a bank, fresh cash to fund loans. A zero-coupon bond pays no yearly interest, so the company repays one lump sum at maturity instead of regular cash payments.

Analyst inference

Both bonds carry AAA ratings from Crisil and Care, the highest grade, which means rating firms see low repayment risk. That high grade helps the lender attract investors and may let it borrow at lower cost than weaker-rated finance companies.

Analyst inference

What to watch

1. The company has invited commitment bids for the bond issue on Wednesday, the bankers said, so the auction outcome will show how much money investors are willing to lend. Confirmed
2. Watch whether Poonawalla Fincorp uses the full 20 billion rupees including the greenshoe, an option to sell more bonds than the base size if demand is strong. Proposed
3. Track whether the company comments on the fundraise; it did not immediately respond to a Reuters email seeking comment, leaving its plans for using the borrowed money undisclosed. Analyst inference

Evidence

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