SP Group plans Rs 25,000 crore bond issue; pricing seen 300-400 bps lower on Tata stake visibility: Report

Overseas, the group is planning a three-year dollar bond issue of between $750 million and $1 billion

• SP Group plans to raise Rs 25,000 crore via bonds in April
• Borrowing costs expected to drop 300-400 basis points
• Improved rates linked to Tata Sons stake monetisation prospects

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Shapoorji Pallonji (SP) Group is preparing to raise about Rs 25,000 crore (roughly $2.8 billion) through a mix of domestic and overseas bonds, with pricing expected to be 300-400 basis points lower than its previous borrowing round, people familiar with the discussions told The Economic Times.

The anticipated improvement in rates reflects stronger investor confidence, driven by clearer visibility on asset sales and the possibility of a stake ownership settlement with Tata Sons. One basis point equals one-hundredth of a percentage point.

Sources told The Economic Times that the fundraising, likely to conclude in early April, may be split in a 2:1 ratio in favour of the domestic market. The infrastructure conglomerate is expected to raise around Rs 15,000-16,000 crore via rupee-denominated non-convertible debentures (NCDs) in India.

Overseas, the group is planning a three-year dollar bond issue of between $750 million and $1 billion, the people cited by The Economic Times said, declining to share further details as investor discussions remain private.

Market participants indicated to The Economic Times that the pricing on the combined package could be significantly tighter than the 18.75 percent coupon paid in 2023, when the group raised Rs 14,300 crore through Goswami Infratech. That borrowing matures on April 30 this year.

One person aware of the negotiations told The Economic Times that funding costs are likely to decline meaningfully as transaction contours become clearer. The potential monetisation of SP Group's stake in Tata Sons enhances recovery prospects for lenders and bondholders, the person added.

Bankers cited by The Economic Times said improved pricing expectations are also linked to greater clarity around the prolonged dispute between SP Group and Tata Sons, including discussions around stake monetisation. The Mistry family-led SP Group owns approximately 18.75 percent of Tata Sons, making it the largest minority shareholder in the holding company of India's largest conglomerate.

The debate over whether Tata Sons must list under Reserve Bank of India norms applicable to upper-layer non-banking financial companies continues. However, market participants told The Economic Times that either a public listing or a negotiated settlement could unlock value and strengthen SP Group's credit standing.

Tata Trusts Chairman Noel Tata is understood to have outlined certain conditions related to a potential listing in the context of leadership matters at Tata Sons, The Economic Times reported earlier on February 24. One of those conditions involves an eventual settlement with SP Group, which lenders view as supportive of stake monetisation prospects, a source said.

Investor appetite for the upcoming issuance appears robust. People briefed on the matter told The Economic Times that at least one-third of the proposed fundraising could come from dollar bond investors, with the remainder expected from foreign banks, domestic institutions and private credit funds.

While timelines are yet to be finalised, lenders indicated to The Economic Times that the base-case scenario - which assumes partial deleveraging backed by monetisation - remains intact.

If priced at the tighter end of expectations, the bond issuance would materially lower SP Group's borrowing costs and serve as a signal of renewed investor confidence in its refinancing strategy, market participants told The Economic Times.