SP Group to Issue Rs 25,000 Crore in Bonds, Pricing Expected to Decrease Following Tata Stake Visibility

Shapoorji Pallonji Group Seeks Rs 25,000 Crore via Bonds

The Shapoorji Pallonji (SP) Group is planning to raise approximately Rs 25,000 crore ($2.8 billion) through a combination of domestic and overseas bonds. This move is expected to be priced 300-400 basis points lower than its previous borrowing round, reflecting improved investor confidence.

Key Factors Driving Investor Confidence

• Clearer visibility on asset sales
• Possibility of a stake ownership settlement with Tata Sons
• Stronger investor appetite for the upcoming issuance, with at least one-third of the proposed fundraising expected to come from dollar bond investors

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Fundraising Structure

• The fundraising is likely to be split in a 2:1 ratio in favor of the domestic market
• Rs 15,000-16,000 crore via rupee-denominated non-convertible debentures (NCDs) in India
• A three-year dollar bond issue of between $750 million and $1 billion overseas

Market Expectations

• Pricing on the combined package could be significantly tighter than the 18.75 percent coupon paid in 2023
• Funding costs are likely to decline meaningfully as transaction contours become clearer
• Improved pricing expectations are linked to greater clarity around the prolonged dispute between SP Group and Tata Sons

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Impact on Credit Standing

• Either a public listing or a negotiated settlement could unlock value and strengthen SP Group's credit standing
• A potential listing or settlement would enhance recovery prospects for lenders and bondholders