Samvardhana Motherson International, an auto parts manufacturer, successfully raised $350 million by issuing five-year bonds to overseas investors. The bonds, sold through its subsidiary SMRC Automotive Holdings Netherlands, were priced late on Wednesday at 140 basis points above the five-year US Treasury rate, which is currently around 4.30%, yielding an overall rate of 5.72% after costs.
The funds from this bond issue will be used to refinance existing debt maturing later this month, according to sources familiar with the matter. Samvardhana Motherson provided an unconditional and irrevocable corporate guarantee for the bonds, as disclosed in a recent stock market announcement.
The final pricing of the bonds was tighter than the initial price guidance of 175 basis points above the five-year US Treasury, largely due to the total order book reaching $2.20 billion. This strong demand allowed the company to secure more favorable terms.
JP Morgan, MUFG, DBS Bank, and BNP Paribas were among the banks involved in the issuance. The raised funds will primarily refinance a 300 million euro bond maturing later this month.
In June, Moody's upgraded the long-term ratings for both Samvardhana Motherson International and SMRC Automotive from Ba1 to Baa3 with a stable outlook, citing improved profitability and cash flows. Kaustubh Chaubal, a senior vice president at Moody’s, highlighted that the upgrade to investment grade reflects the sustained strengthening in Samvardhana Motherson's financial metrics, improved scale, diversification, and profitability following the integration of several acquisitions.
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