SP Group Subsidiary Faces Debt Downgrade Amid Upcoming $3 Billion Refinancing Effort

Indian Rating Agency Downgrades Goswami Infratech Bond Due to Fundraising Delays

CareEdge, a leading Indian rating agency, has downgraded the non-convertible debentures (NCDs) issued by Goswami Infratech, a unit of the Shapoorji Pallonji (SP) Group, to B+, from BB-. This downgrade comes in light of the delays in group-level fundraising versus earlier timelines and mounting refinancing risks.

The real estate and civil engineering firm's NCDs were downgraded on Wednesday. The Shapoorji Pallonji Group did not immediately respond to a Reuters request for comment.

Goswami Infratech's plan to raise between $2.8 billion and $3.1 billion over the past few months has been delayed, with the surge in rupee hedging costs playing a major role. In an effort to address this issue, the company has now planned to split its fresh fundraising between dollar and rupee bond issues, with the goal of completing these issues before the end of June, according to merchant bankers.

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The downgrade also takes into account the extension the company sought to repay high-yield debt to June 30 from April 30, as per CareEdge. Investors have agreed to this extension. The company had raised 143 billion rupees ($1.51 billion) in June 2023 through this bond issue, in which marquee foreign investors participated.

CareEdge further stated that the group had an alternate funding line assurance, even while the extension was being sought, to meet the redemption requirement on the original maturity date. The bonds were originally issued at a yield of 18.75%, which has been stepped up due to breach of some covenants. After partial pre-payments to some investors, the bonds have an outstanding principal amount of 83.43 billion rupees, with total repayment of around 136 billion rupees including the interest payout.