Shapoorji Unit Secures High-Yield Debt Funding from JPMorgan and BlackRock

Shapoorji and Pallonji Group Pursues High-Yield Bond Sale Amid Debt Repayment Delays

The Shapoorji and Pallonji Group, India's largest private credit borrower, is negotiating with global investors, including BlackRock and JPMorgan Chase & Co., for a high-yield bond sale. Despite being allowed to delay repayment on existing debt, the conglomerate is offering yields of at least 14% to raise as much as $1 billion. The terms of the bond sale are still under negotiation and could change.

The proposed bond sale consists of three-year dollar bonds, with a few more global asset managers in talks to participate. Some investors may use leverage facilities from lenders, including Standard Chartered Plc, to finance their investments. This fundraising effort is part of a broader strategy to refinance a borrowing by a group entity, Goswami Infratech Pvt., which creditors recently agreed to extend to June 30.

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The proposed bond yield of at least 14% is at the higher end of the range for Indian issuers. In contrast, Lodha Developers International Ltd. raised $200 million at 14% in 2020, while Vedanta Resources sold $1 billion of three-year bonds at 13.875% in the same year.

The investor interest in the bond sale reflects a risk-reward balance. Double-digit returns are hard to find in global credit markets, and some funds are willing to look past near-term stress in the belief that the infrastructure conglomerate will be able to unlock value from its 18.4% stake in Tata Sons, the holding firm of India's Tata Group. However, delays in unlocking value from this holding, alongside broader market volatility, have complicated refinancing efforts for the group.

The Shapoorji and Pallonji Group is also exploring local borrowing to meet remaining refinancing needs, as it works to complete the process before the extended June deadline for Goswami Infratech.