Shapoorji Refinancing Delays Spur Some Bondholders to Seek Exit

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(Bloomberg) — Some bondholders of Shapoorji Pallonji Group, India’s largest private credit borrower, are attempting to sell debt linked to one of its units as prolonged refinancing talks test investor patience, people familiar with the matter said.

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Traders in Singapore and Hong Kong have been offering the so-called non-convertible debentures, a type of private credit in India, of subsidiary Goswami Infratech Pvt. at about 90% of par in the past two weeks, although it wasn’t immediately clear whether any trades were executed, according to the people, who asked not to be identified discussing private matters. In credit markets, such levels can indicate that holders are starting to have concerns about potential strains, even if they’re still far from distressed levels.

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An investment unit of the infrastructure conglomerate has recently been asking creditors to allow it to delay the repayment of the notes with 83.43 billion rupees ($884 million) outstanding that mature this month. Some investors who individually hold the equivalent of $100 million or less were seeking to exit or trim their positions, the people said. Shapoorji didn’t respond to a request for comment.

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Shapoorji is closely watched in India’s private credit market, one of Asia’s fastest growing, and in the nation’s economy given its clout employing more than 37,000 people. Founded in 1865 and with iconic construction projects including the building that houses the Reserve Bank of India, Shapoorji sprung to the attention of global debt funds last year when it secured $3.4 billion from investors including Ares Management Corp and Cerberus Capital Management.

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The group — which operates across engineering and construction, real estate, infrastructure, energy and industrial projects — has faced liquidity pressures since the pandemic after it piled on large amounts of debt, prompting it to list subsidiaries and offload assets. 

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Shapoorji has been trying since late last year to refinance debt and reduce near-term repayment risks. Goswami is seeking to extend its zero-coupon bonds by at least a month beyond the June 30 maturity date. 

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Borrowings by Goswami are backed partially by Shapoorji’s 18.4% stake in Tata Sons Pvt., the unlisted holding company of the Tata Group. Tata Sons derives much of its worth from its holding in Tata Consultancy Services, whose shares are trading near a six-year low amid a broader selloff in software stocks, weighing on Tata Sons’ valuation.

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The notes have already been extended once in April, with the company agreeing to pay investors a 25 basis points consent fee to push out the due date then. 

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Goswami issued the zero-coupon bonds in 2023 in what was then the country’s largest high-yield debt sale, pricing the notes at an 18.75% yield. While the outstanding principal has since fallen, the yield on the notes has risen to 21.75%. 

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—With assistance from Saikat Das and Jackie Cai.

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