MUMBAI: JM Financial Credit Solutions (JMFL), a non-banking finance arm of JM Fin Group, will raise up to Rs 1,250 crore through retail bond sale, indicating that investors are likely to regain confidence in the sector.
The company, which lends to real estate builders, will offer rates in the range of 9.67% and 10.25% across maturities. There are a set of three maturities, including three and a half-year, five-year, and 10-year. The bond sale will open for subscription on November 20.
“We plan to use the proceeds both for expanding loans and debt repayments besides general corporate purposes,” said Shashwat Belapurkar, CEO, JM Financial Credit Solutions, confirming the matter. “We aim to reduce our share of short-term borrowing by the end of this year.”
He also said that the company is focusing on technology to manage and grow its business.
Rating companies, India Ratings and ICRA, have rated the issuance as AA grade with a stable outlook.
The company has marked Rs 250 crore as the base size of the issue while the rest could be mopped up through oversubscription. Edelweiss Fin along with few others are helping the company to sell the bonds.
The share of commercial papers is now at about 20% of the companys total liabilities. JM has planned to cut it to 12-15% by December-end.
Last month, former chief executive officer of CitiGroup Vikram Pandit, along with JM Group and others have reportedly invested Rs 875 crore in JM Financial Credit Solutions.
The companys loan book now stood at Rs 8,738 crore in the first half (April-September) of the financial year. Residential projects have contributed nearly three-fourth to the loan book.
In the past two months, non-banking finance companies have been finding it tough to raise money from debt capital market as investors turned apprehensive following a series of defaults by infrastructure conglomerate IL&FS.
Improvement in JMFLs credit profile while maintaining the importance of the lending business, along with portfolio seasoning and less concentrated portfolio while maintaining strength in capital market-related businesses, could result in a positive rating action, India Ratings said in a report.
The companys debt to equity ratio, a measure of a companys indebtedness, is now at 2.5, compared with 3.5 at the beginning of the financial year.
Any weakness in JMFLs credit profile, which, among other factors, could result from dilution of the capital buffers or from inadequate liquidity buffers, may result in a negative rating action, the rating company had cautioned in a report in April.