Bajaj Finance to issue multiple-tenor bonds, bankers say

What happened

Bajaj Finance plans to raise up to 35 billion rupees, or $367.7 million, through bonds, including a greenshoe option of 22.5 billion rupees, which lets it sell more than the base amount. Bankers say the bonds mature in three years and two months, and five years.

Confirmed

Global impact / market context

Borrowing money through bonds gives the non-bank lender cash to fund loans, so its cost of borrowing directly shapes profit per sale. A larger issue also increases debt on its balance sheet, which investors will weigh against future revenue.

Analyst inference

The bonds carry a AAA rating from Crisil, which means a low risk of default. That rating can help Bajaj Finance borrow at a lower interest rate than lower-rated issuers, reducing funding costs relative to peers.

Analyst inference

What to watch

1. Coupon bids and commitment bids for the issue are invited on Thursday, so the interest rate the company will pay is not yet decided and remains unknown to investors. Confirmed
2. Watch how much of the 35 billion rupees is actually sold; if demand is weak, the company may raise less cash, which could slow loan growth and revenue. Analyst inference
3. Track the final coupon on the three-year and five-year bonds, because a higher rate would raise interest costs and reduce profit per sale on loans funded by this debt. Proposed

Evidence

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