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Economic Times
11-06-2025
- Business
- Economic Times
SP Group offers $3.4 billion NCDs to HNI investors amid market volatility
Mumbai: Wealth managers are offering Shapoorji Pallonji Group's latest $3.4 billion (₹28,500 crore) non-convertible debentures to high-net-worth individuals, but only to those willing to invest a minimum of ₹10 crore in the secondary market. ADVERTISEMENT A small portion of the debentures, originally placed with institutional investors at a yield of 19.75%, is being sold down to wealthy clients at yields of 18.0-18.5%, allowing distributors to pocket a spread of up to 175 basis points (1.75 percentage point). During group firm Goswami Infratech's ₹14,300 crore fundraising in 2023, the bonds saw secondary market volatility as smaller HNIs flipped their positions when market sentiment turned. At one point, the debentures originally issued at a yield of 18.75% were trading at as high as 22%, following a covenant breach and a fall in perception, even before any material credit deterioration. The latest NCD offering, being an unrated and unlisted tranche, comes with much less disclosure, information and compliance obligations compared to the previous, exchange-listed tranches."Last time, a lot of HNIs panicked and exited too quickly," said a wealth manager. "It spooked the market and distorted the credit story. This time, they have raised the bar to ₹10 crore, and they are filtering for patient capital."The group has also avoided a wide domestic HNI distribution this time. Wealth managers say the allocations to Indian individuals are a fraction of the ₹28,500 crore transaction. ADVERTISEMENT Experts have been concerned over affluent and mass-affluent segments getting into credit often without a full understanding of the risks. "Private credit is not for everyone," said Nachiket Naik, head of private credit Axis Asset Management. "Family offices come through funds that do deep diligence. But direct HNI participation, especially via digital platforms, is a different beast." Cases like BluSmart, an early-stage mobility platform that raised funds from HNIs via listed NCDs, have led to caution among investors. (You can now subscribe to our ETMarkets WhatsApp channel)
Time of India
11-06-2025
- Business
- Time of India
SP Group offers $3.4 billion NCDs to HNI investors amid market volatility
Mumbai: Wealth managers are offering Shapoorji Pallonji Group 's latest $3.4 billion (₹28,500 crore) non-convertible debentures to high-net-worth individuals , but only to those willing to invest a minimum of ₹10 crore in the secondary market. A small portion of the debentures, originally placed with institutional investors at a yield of 19.75%, is being sold down to wealthy clients at yields of 18.0-18.5%, allowing distributors to pocket a spread of up to 175 basis points (1.75 percentage point). by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Air conditioners without external unit. (click to see prices) Air Condition | Search Ads Search Now Undo During group firm Goswami Infratech's ₹14,300 crore fundraising in 2023, the bonds saw secondary market volatility as smaller HNIs flipped their positions when market sentiment turned. At one point, the debentures originally issued at a yield of 18.75% were trading at as high as 22%, following a covenant breach and a fall in perception, even before any material credit deterioration. The latest NCD offering, being an unrated and unlisted tranche, comes with much less disclosure, information and compliance obligations compared to the previous, exchange-listed tranches. "Last time, a lot of HNIs panicked and exited too quickly," said a wealth manager. "It spooked the market and distorted the credit story. This time, they have raised the bar to ₹10 crore, and they are filtering for patient capital." Live Events The group has also avoided a wide domestic HNI distribution this time. Wealth managers say the allocations to Indian individuals are a fraction of the ₹28,500 crore transaction. Experts have been concerned over affluent and mass-affluent segments getting into credit often without a full understanding of the risks. "Private credit is not for everyone," said Nachiket Naik, head of private credit Axis Asset Management. " Family offices come through funds that do deep diligence. But direct HNI participation, especially via digital platforms, is a different beast." Cases like BluSmart, an early-stage mobility platform that raised funds from HNIs via listed NCDs, have led to caution among investors.
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Business Standard
24-05-2025
- Business
- Business Standard
Sebi eases norms for Category II AIFs on debt securities investments
The Securities and Exchange Board of India (Sebi) has relaxed norms for Category II Alternative Investments Funds (AIFs), allowing them a wider investable universe and opportunities in the debt securities. The new norms permit Cat II AIFs to invest in listed debt securities with a credit rating of 'A' or below. The market regulator had proposed the changes in a consultation paper in February and brought the amendments through a notification dated May 21. 'The amendment provides greater flexibility to the investment managers to determine their investment strategy. The regulator has kept the basis of investments as the placement memorandum instead of just listed, unlisted, and rating classifications. It shows that they don't want constraints till the time the investment strategy is mentioned in the PPM," said Nachiket Naik, head – Structured Credit at Axis AMC. "This increased flexibility demonstrates the maturity of the sector and the consequent growing confidence of the regulator,' he added. The AIF industry had sought relief after an earlier amendment to Listing Obligation and Disclosure Requirement Regulation (LODR), that could shrink the investment opportunities in unlisted debt securities for AIFs making fresh investments. Following the LODR amendments, the entities that had issued listed non-convertible debentures (NCDs) on or before January 1, 2024 would not be eligible to issue any unlisted NCDs till even one listed NCD is live. However, Category II AIFs are mandated to invest primarily in unlisted securities. Relaxing the norms for AIFs, the new notification states, 'Category II Alternative Investment Fund shall invest primarily in unlisted securities and/or listed debt securities (including securitised debt instruments) which are rated 'A' or below by a credit rating agency registered with the Board, directly or through investment in units of other Alternative Investment Funds, in the manner as may be specified by the Board.' Sebi's consultation paper had noted that there were around 192 category II AIF schemes which had invested more than 50 per cent of their investments in unlisted debt. By allowing investments in lower-credit paper, the regulatory framework will provide AIFs greater flexibility and diversification opportunities and also align with the high-risk appetite.
Economic Times
22-05-2025
- Business
- Economic Times
Axis AMC announces final close of Axis Structured Credit AIF II at Rs 740 crore
Axis Asset Management Company announces the final close of Axis Structured Credit AIF II, successfully raising commitments of approximately Rs 740 crore. The fund has garnered significant interest from investors, reinforcing the firm's position in the structured credit investment fund received strong backing from a diverse investor base, with close to more than half of commitments coming from institutional investors, including insurance companies, corporates (both listed and unlisted), and family offices. The remaining commitments were secured from HNIs and wealth management channels, underscoring the trust and confidence placed in Axis AMC's expertise in structured credit investments, according to a release by the fund house. Also Read | MF Tracker: Can this mega largecap fund add stability to your portfolio in volatile market? 'The successful close of Axis Structured Credit AIF II reflects our continued commitment to providing investors with high-quality credit investment opportunities. The strong participation from institutional and wealth investors underscores confidence in our ability to navigate evolving market dynamics and deliver superior risk-adjusted returns. This fund aligns with our broader vision of offering innovative investment solutions that cater to sophisticated capital allocators," said B. Gopkumar, MD & CEO, Axis AMC. Axis Structured Credit AIF II aims to create a highly diversified portfolio, ensuring prudent risk management through disciplined exposure limits the fund will primarily focus on structured credit opportunities, with most of the individual deals ranging between Rs 50-65 crore, enabling capital deployment across select assets, while investing not more than 10% of fund size in a single fund will primarily focus on structured credit opportunities, with most of the individual deals ranging between Rs 50-65 crore, enabling precise capital deployment across select assets, while ensuring not to invest more than 10% in a single security for each deal size. Also Read | Mutual funds for beginners: What strategy should students adopt to start investing?With a total tenure of five years from its first close in October 2023, the fund will actively capitalize on prevailing liquidity conditions, transitioning toward shorter-term bonds and enhanced corporate debt exposure. As liquidity remains abundant, the fund is positioned to take advantage of tightening credit spreads and robust corporate balance sheets, ensuring well-calibrated investment strategies. "We believe structured credit presents a compelling opportunity in today's dynamic market environment. With Axis Structured Credit AIF II, our approach has been to offer bespoke financial solutions, through well structured transactions to key relationship clients. Our commitment to disciplined risk management and diversification remains at the core of our strategy, ensuring sustainable value creation for investors," said Nachiket Naik, Head – Structured Credit, Axis AMC. (Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)
Reuters
15-04-2025
- Business
- Reuters
India moves to deepen junk debt market by allowing bad loan securitisation
MUMBAI, April 15 (Reuters) - The Indian central bank's plan to allow lenders to bundle bad loans into tradable securities will draw foreign portfolio investors (FPIs) and private credit funds, helping deepen the country's junk debt market, analysts and investors said. The Reserve Bank of India (RBI) said last week it would now permit market-determined securitisation of stressed assets, besides those loans where repayments were on track. The volume of securitised standard loans jumped 25% to 2.3 trillion rupees ($26.74 billion) in 2024-25, data from India Ratings and Research showed. Pooling together stressed retail and personal loans will allow banks to lighten their balance sheet and give investors high-yield investment options. It will also draw new investors, broadening the market and giving it more liquidity and depth, said Hari Hara Mishra, CEO of the Association of ARCs (Asset Reconstruction Companies) in India. The debilitating corporate bad-loan cycle in the previous decade took years to clean up and pushed banks to shift focus to the unsecured retail segment, resulting in higher delinquencies. Overall, the sector's bad loans ratio is expected to rise to 3% by March 2026 from a 12-year low of 2.6% in September. High-yield investors, however, are interested in both stressed corporate loans and similar small-ticket loans, said Nachiket Naik, head of private credit at Axis Asset Management. Personal loans and credit card debt accounted for approximately 52% of fresh bad loans in banks' retail portfolios between April and September last year, RBI data showed. So far, the lack of options has forced banks to sell these loans to ARCs at a 90%-95% haircut. Now, banks not only get the option of securitising these loans but the lure of higher returns from such issues will also attract investors, including FPIs and private credit firms. The expected yield of such a pool of stressed assets will be higher than that of a junk or high-yielding bond and akin to what a distressed fund expects from its investments, said Ajit Velonie, senior director at Crisil Ratings. U.S. and European distressed debt funds are drawn to high-yield opportunities in emerging markets such as India, said Sankar Chakraborti, CEO of Acuite Ratings and Research. However, there are some challenges, including the pricing of such securities. "The price determination of NPA securitization deals is influenced by various granular factors such as asset quality, recovery rate, historical probability of defaults of the underlying asset classes and investor sentiments," noted Manisha Shroff, partner at law firm Khaitan & Co.
