Shriram Transport Finance to raise up to Rs 1000 cr via NCDs

Shriram Transport Finance Company Ltd (STFC) is planning to raise up to Rs 1,000 crore by issuing Secured Redeemable Non-Convertible Debentures (NCDs) of the face value of Rs 1,000 each. 

The company’s Tranche 2 Issue of NCDs, which will open on January 6 and close on January 22, has a base size of Rs 200 crore with an option to retain over-subscription aggregating up to Rs 1,000 crore. 

STFC caters to first time buyers and small road transport operators for financing pre-owned commercial vehicles (CVs). These NCDs, bearing a fixed rate of interest, are being offered under 8 (eight) different series, the company said in a statement.

Series I, II and III are monthly interest payment options, having tenor of 3, 5 and 7 years respectively, and the monthly coupon will be 8.52 per cent, 8.66 per cent and 8.75 per cent, respectively.

For Series IV, V and VI, interest is payable annually, having tenor of 3, 5 , 7 years respectively, and the coupon will be 8.85 per cent, 9.00 per cent, 9.10 per cent, respectively.

Series VII and VIII are cumulative options, having tenor of 3 and 5 years respectively, where face value and interest accrued are paid at the end of the tenor and will be redeemed at Rs 1289.99 and Rs 1539.35 per NCD respectively. Effective yield for Series VII and VIII will be 8.85 per cent and 9.00 per cent, respectively.

Umesh Revankar, MD & CEO, said the last quarter (January-March) is going to be a big quarter in terms of demand for used CVs. Hence, STFC is raising the resources. “The company had raised Rs 350 crore via the first tranche of NCDs earlier this year. The resources we will be raising via the second tranche will be about 20 basis points cheaper,” said Revankar.

The NCD issue have an option of early closure or extension, as may be decided by the Board of Directors of the Company or the duly constituted committee thereof, the statement said. The funds raised through the Tranche 2 Issue will be used for onward lending, financing, and for repayment/prepayment of interest and principal of existing borrowings of the Company and for general corporate purposes, it added.

The company said the proposed NCDs under the Tranche 2 Issue have been rated ‘AA+; Stable’ by CARE Ratings; ‘AA+/Stable’ by CRISIL; and ‘AA+: Outlook Stable’ by India Ratings and Research. These ratings are considered to have high degree of safety regarding timely servicing of financial obligations and carry very low credit risk.