Sparking a change
Indian property company Goswami Infratech, part of the diversified Shapoorji Pallonji Group (SP Group), sold a Rs143bn (US$1.74bn) high-yield bond in the domestic market in June, in a landmark transaction that blended private credit with the public bond market.
The bond exemplified a key trend in Asia, and in particular India, in 2023 – the exponential growth of private credit. Taxation changes in India made mutual fund investments less attractive and prompted a hunt for yield. That led investors to high-yielding rupee bonds and private credit transactions.
Goswami Infratech’s bond was far from a simple high-yield note, and it was in the works for four months before launch. The April 2026s pay no coupon during the life of the bond but accrue interest at 18.75% compounded annually to fund a redemption premium payable on maturity.
The promoters of SP Group have a 9.2% stake in unlisted Tata Sons, which in turn holds stakes in listed companies from the Tata group. SP Group had to rebuild its market access after coming out of restructuring in 2022, and used additional collateral to support the bond. The note is backed by the entire Tata Sons stake, valued at US$13.5bn, and SP Group’s controlling stakes in Afcons Infrastructure and SP Ports assets, allowing Goswami Infratech to obtain a BBB– rating by Care, and providing comfort to investors.
While the deal had its genesis as a private credit trade, it was structured as a bond and sold through India’s electronic bidding platform to allow foreign investors to participate.
The deal was syndicated to leading private credit funds such as Ares Capital Management, Cerberus Capital Management, Davidson Kempner, Farallon Capital Varde Partners and a clutch of domestic wealth managers. All in all, 19 qualified institutional buyers and one non-qualified institutional investor bought the bonds.
The high-yielding notes also became a hit with high-net-worth investors in the secondary market, as these investors were not eligible to buy in the primary offering.
The Goswami Infratech deal was the largest high-yield trade ever seen in India’s onshore bond market and garnered huge demand. That paved the way for other high-yield transactions to follow, such as the Rs32bn five-year print from Jayaswal Neco Industries, a manufacturer of iron and steel castings and pipes, which priced at 17.5%.
Deutsche Bank and Standard Chartered Bank were the joint lead arrangers and administrative agents for the Goswami Infratech bonds.
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