According to reports from The Hindu BusinessLine, Business Standard, Bloomberg, and The Economic Times, Mercury Finance, a unit of India's Shapoorji Pallonji Group, is raising $125 million through the reissue of a U.S. dollar bond maturing in nearly three years. The company will raise funds by reopening its zero-coupon dollar bonds due July 2029, with the company retaining the right to redeem them after one year. As reported by sources familiar with the matter, the real estate conglomerate plans to use the proceeds to invest in rupee-denominated bonds to be issued later by a local group entity.
According to The Economic Times, the fundraising is expected to close by Thursday, with payments assigned for October 1. The group informed bondholders last week that it will make the payment by October 1. The dollar sale would be followed by another reissuance, with the sources declining to be identified as they were not authorized to speak to the media. Shapoorji Pallonji Group did not respond to a Reuters request for comment. The current arrangement represents what sources described as a 'miniature version' of what occurred in July, though the magnitude is much smaller. In July, Mercury Finance had raised $650 million, which was invested in rupee debt sold by Eqyizen Investment.
As reported by The Economic Times, the funds from this dollar-rupee fundraising deal will be used for meeting a payment obligation of Porteast Investment, another subsidiary, that is due to pay around ₹3,500 crore for debt raised in May 2025. The group has sought an extension to the deadline to October 31. Eqyizen Investment, another SP Group unit, will reissue zero-coupon, rupee-denominated bonds maturing in July 2029, having raised ₹21,350 crore via the original issue at 18.95% yield in July. The fundraising exercise saw strong demand, with the issue significantly oversubscribed, leading the group to scale back investor allocations.
According to The Economic Times, bond yields in India are anticipated to increase in the latter half of this fiscal year, primarily due to higher government borrowing and ongoing inflationary pressures. Analysts expect demand for government securities to fall significantly short of supply. The trajectory of bond yields will also be heavily influenced by oil prices, particularly if crude stays high. Yields on SP Group's dollar bonds have tightened by about 50 basis points since the Reserve Bank of India rejected Tata Sons' application to voluntarily surrender its registration as an upper-layer non-banking financial company. The group is also raising about ₹3,250 crore through unrated rupee-denominated debt at a yield of 18.95%, with a similar remaining tenor of two years and 10 months.
