Auto major Mahindra on Tuesday raised Rs 500 crore (Rs 5 billion) in a 50-year unsecured bond sale programme, becoming the first domestic firm to sell such a long-tenure rupee debt instrument.
Confirming the development, Mahindra Group Chief Information Officer and EVP for group M&As, finance & accounts, V S Parthsarathy told PTI that the proceeds of the issue will be used for capex, project funding, refinancing of capex loans as well as long-term working capital requirements.
The bond comes with a bullet redemption option (payment at the end of the maturity) and carries an annual interest rate of 9.55 per cent and does not have call or put option.
On the rationale for such a long-term bond sale, he said: "We wanted to do a benchmark deal with a maturity horizon heretofore unexplored, leveraging our credit profile and rare issuer status."
Yes Bank was the sole merchant bankers to the deal, the company said, adding the issue was opened and closed on Tuesday.
Rating agency Crisil in a statement said this is the longest-tenure rupee-denominated non-convertible debenture sale and has assigned an AA /stable rating.
"This issue will be the first 50-year plain-vanilla rupee-denominated instrument by a domestic corporate. This is indicative of the increasing confidence of investors in corporate the long-term prospects of the country," Crisil said in a statement.
Commenting on the issue, senior director at Crisil Pawan Agrawal, "The issuance of such long-term instruments highlights the increasing depth and maturity of the domestic debt market. In the past, corporates have looked towards international markets for such issuances. With the introduction of such long-term instruments, they can now also tap the domestic markets for long-term funds.
"Such instruments will also enhance their financial flexibility to efficiently manage their funding profiles," he said.