Muthoot Finance Limited, India’s largest gold loan non-banking financial company (NBFC), has announced a significant development in its global fundraising strategy. The company has mandated a benchmark USD bond issue under its US$ 2 billion Global Medium Term Note (GMTN) Programme. This step marks an important milestone for the company as it continues to diversify its sources of funding and strengthen its balance sheet in line with international best practices.

The official announcement was made through a stock exchange filing under Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. As per the disclosure, Muthoot Finance has appointed Deutsche Bank and Standard Chartered Bank as Joint Global Coordinators and Bookrunners (JGCBs) for this issuance. These banks are among the world’s leading institutions in international debt capital markets, ensuring robust investor outreach and execution capability.

The upcoming bond issue is expected to be a benchmark-sized transaction, which typically refers to a debt issue large enough to attract broad participation from global institutional investors. The senior secured notes are proposed to carry a tenor of 4.5 years, and the proceeds will be used for onward lending purposes in compliance with the Reserve Bank of India’s External Commercial Borrowing (ECB) guidelines.

Muthoot Finance’s US$ 2 Billion GMTN Programme

The Global Medium Term Note Programme (GMTN) allows Muthoot Finance to raise funds from international markets in a structured and flexible manner. Under this framework, the company can issue a series of bonds or notes up to a cumulative value of US$ 2 billion, denominated in different currencies and across various maturities.

GMTN programmes are widely used by multinational corporations and financial institutions because they provide fundraising flexibility while ensuring compliance with international debt capital market standards. For Muthoot Finance, the programme offers a cost-effective route to access long-term funding from global investors, reducing dependency on domestic borrowing channels.

This USD bond issue marks the next phase in the utilisation of the GMTN framework, and by structuring the bonds under Rule 144A and Regulation S, Muthoot Finance will be able to access both U.S. qualified institutional buyers (QIBs) and investors from other international jurisdictions. This widens the investor pool and enhances the liquidity of the bonds once issued.

Details of the Benchmark USD Bond

According to the disclosure, the bonds will be benchmark-sized senior secured notes with a maturity of 4.5 years. Benchmark issuances usually start from a size of US$ 500 million or more, ensuring significant participation and secondary market liquidity. The issuance will take place subject to prevailing market conditions and investor demand.

The use of proceeds from the bond issue has been clearly defined. Muthoot Finance intends to use the funds for onward lending, which means deploying the borrowed capital to expand its loan book, particularly its gold loan portfolio. This approach aligns with RBI’s ECB guidelines, which allow NBFCs to raise foreign debt for lending purposes, provided they adhere to prescribed maturity, hedging, and end-use restrictions.

The issuance structure is expected to attract participation from a wide range of investors, including global asset managers, insurance companies, pension funds, and sovereign wealth funds. By tapping the offshore bond market, Muthoot Finance will be able to diversify its investor base beyond Indian banks, mutual funds, and retail bondholders.

Appointment of Joint Global Coordinators and Bookrunners

The appointment of Deutsche Bank and Standard Chartered Bank as Joint Global Coordinators and Bookrunners highlights Muthoot Finance’s intent to position the bond issue as a globally competitive offering.

• Deutsche Bank has a strong track record in arranging international debt deals for Indian corporates and financial institutions.

• Standard Chartered Bank, with its deep roots in Asia and emerging markets, brings wide investor access and expertise in structuring debt instruments.

Together, these institutions will handle investor marketing, order book management, and pricing of the bonds. They will also conduct roadshows and investor calls, ensuring global investors are briefed about Muthoot Finance’s business model, credit profile, and growth strategy.

Investor Communication and Market Outreach

Muthoot Finance has confirmed that it has already scheduled an investor conference call, which will be co-hosted by the appointed banks. This call will provide prospective investors with insights into the company’s performance, asset quality, financial discipline, and growth outlook.

Investor communication plays a critical role in offshore bond issuance, as it builds confidence among international participants who may not be as familiar with India’s NBFC sector. By engaging actively with the global investment community, Muthoot Finance seeks to achieve tighter pricing and broader participation.

Ratings and Market Perception

For global bond investors, credit ratings are a crucial factor. Muthoot Finance’s bonds under the GMTN programme are expected to be rated by major international rating agencies, including Moody’s, Fitch, and S&P. These ratings will provide independent assessments of the company’s creditworthiness and repayment ability.

Historically, Indian NBFCs have enjoyed strong demand for offshore bonds, provided they maintain adequate capitalization, asset quality, and profitability. Muthoot Finance, being the largest gold loan provider in India, enjoys a unique business model with secured lending practices, which adds to its attractiveness as a credit. The company’s loans are backed by physical gold, offering strong collateral coverage and mitigating risks of default.

Strategic Importance of the Bond Issue

This benchmark USD bond issuance holds several strategic advantages for Muthoot Finance:

1. Diversification of Funding Sources: By raising money offshore, the company reduces reliance on Indian banks and domestic debt markets.

2. Global Investor Base: The bond issue helps Muthoot Finance build relationships with large institutional investors across the U.S., Europe, Asia, and the Middle East.

3. Cost Efficiency: Accessing international debt markets could potentially provide lower interest rates compared to domestic borrowing, depending on market conditions.

4. Strengthened Liquidity: With a sizeable inflow of foreign capital, the company can expand its gold loan book aggressively and tap new lending segments.

5. Reputation Building: Successfully executing a benchmark-sized transaction enhances Muthoot Finance’s standing in global capital markets, paving the way for future issuances.

Muthoot Finance’s Position in India’s Financial Sector

Muthoot Finance is a household name in India, primarily known for its gold loan business, which enables individuals to borrow against their gold jewellery. The company’s business model is unique because it operates in a secured lending segment with relatively low credit risk compared to unsecured retail loans.

Over the years, Muthoot Finance has built a loan book exceeding ₹60,000 crore, serving millions of customers across India. Its wide branch network, trusted brand name, and strong focus on financial inclusion have made it the market leader in this space.

Beyond gold loans, the company has diversified into housing finance, microfinance, personal loans, insurance broking, and wealth management, though gold loans remain the core driver of revenue and profitability.

By raising funds through international bonds, Muthoot Finance is reinforcing its capacity to grow and serve India’s credit-hungry population, particularly in semi-urban and rural areas where access to banking remains limited.

Implications for Investors and Markets

The announcement of the bond issuance is expected to draw keen interest from both equity investors in Muthoot Finance and debt market participants. Equity investors will see this as a positive step towards funding growth in a sustainable manner, while debt investors will benefit from exposure to a secured instrument backed by the company’s robust lending model.

Additionally, this issuance will be a test case for the depth of investor appetite for Indian NBFC paper amid global market volatility. A successful issuance will set the stage for other Indian financial institutions to explore similar offshore fundraising opportunities.

Conclusion

The launch of a benchmark USD bond under the US$ 2 billion GMTN Programme is a landmark development for Muthoot Finance. It underscores the company’s ambition to operate at par with global financial institutions, while also supporting India’s growing credit demand.

By appointing Deutsche Bank and Standard Chartered as joint bookrunners, scheduling investor calls, and aligning the issue with RBI’s ECB guidelines, Muthoot Finance is demonstrating its commitment to transparency, compliance, and financial discipline.

For the company, this is not just a fundraising exercise but a strategic step towards building a global financial footprint, strengthening investor trust, and ensuring long-term sustainability.

With the proposed 4.5-year senior secured notes, Muthoot Finance is well-positioned to raise funds efficiently, expand its gold loan portfolio, and continue contributing to India’s financial inclusion story. The successful execution of this transaction will further establish Muthoot Finance as a trusted and credible name in the international debt markets.

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