Muthoot Finance raises $450 million in debut dollar bond sale

Gold loan financier Muthoot Finance raised $450 million by selling foreign currency bonds to international investors across the globe in its maiden issue of such an instrument.

The Kerala based company raised the amount at 6.125% fixed rate, about 25 basis points tighter than the initial price guidance of 6.375% earlier in the morning, mainly due to strong demand from investors. One basis point is 0.01 percentage point.

Muthoot Finance plans to use the proceeds for both refinancing and other business purposes.

"We collected more than $1.2 billion for investors across the world. 37% of them were from Asia and 38% from US. Funds put 88% of the bids. The pricing was tighter than what we had guided for," said a person closely involved in the issue.

The bond sale is part of the company’s medium-term note (MTN) programme. Fitch Ratings has assigned a 'BB+' rating to Muthoot Finance's $2 billion MTN programme with a stable outlook.

“The issuer will use the net proceeds of the notes for lending, general corporate purposes and other activities, in accordance with approvals granted by the RBI and directions on external commercial borrowings,” Fitch said in a rating note.

The company reported an 8% rise in its net profit at Rs 530 crore in the April-June quarter this year. During the period, the group expanded its loans nearly 6% year-on-year to Rs 40,602 crore.

Deutsche Bank and Standard Chartered were bankers to the issue.