NewsOrders & DealsSP Group's Goswami Infratech Faces Higher Interest Costs in ₹25,000 Crore Bond FundraisingSP Group's Goswami Infratech Faces Higher Interest Costs in ₹25,000 Crore Bond Fundraising
Goswami Infratech, SP Group's real estate unit, faces higher interest costs for its ₹25,000 crore bond issue as investors demand rates similar to sister unit Porteast Investment, whose rates rose from 19.75% to 21.75% due to covenant breach. SP Group disputes pursuing 21.75% rates, claiming substantially tighter pricing based on improved credit profile. The fundraising timeline may extend from January to March as the company evaluates options.
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Goswami Infratech, the real estate and civil engineering unit of Shapoorji Pallonji Group, is facing the prospect of higher interest costs as it plans to raise ₹25,000 crores ($2.77 billion) through a two-year zero-coupon bond issue in the coming weeks. The fundraising challenge stems from increased investor expectations following developments with another group company.
Interest Rate Expectations Rise
Investors are now demanding returns similar to those offered by Porteast Investment, another SP Group unit, which experienced a significant increase in borrowing costs. The comparison has created upward pressure on Goswami Infratech's fundraising terms.
| Company | Initial Rate | Current Rate | Issue Size |
|---|---|---|---|
| Porteast Investment | 19.75% | 21.75% | ₹28,600 crores |
| Goswami Infratech | Under negotiation | Expected similar | ₹25,000 crores |
Porteast Investment initially sold three-year bonds at 19.75% interest rate in May, raising ₹28,600 crores in India's largest corporate bond sale ever. However, the interest rate climbed to 21.75% in December after the company failed to meet a covenant linked to a stake sale in another company.
SP Group Disputes Rate Expectations
The SP Group has strongly contested reports suggesting Goswami Infratech is pursuing fundraising at 21.75% rates. In response to queries, the company stated that such reports are "grossly incorrect and totally misleading." The group emphasized that the company will refinance the bonds well ahead of their due dates.
According to SP Group's statement, based on feedback and in-principle interest from investors, the transaction will be at substantially tighter pricing, reflecting an improved credit profile. The group also indicated that the temporary increase in Porteast financing will step down to its original yield.
Timeline and Investor Meetings
The fundraising timeline appears to be extending as Goswami Infratech evaluates its options. Bankers had initially expected the deal to close in January, with the company scheduled to meet prominent investors.
| Aspect | Details |
|---|---|
| Original Timeline | January closure |
| Revised Timeline | Potentially March |
| Target Investors | PIMCO, BlackRock, Vanguard |
| Bond Type | Two-year zero-coupon |
The company had been meeting with major institutional investors including Pacific Investment Management Co (PIMCO), BlackRock, and Vanguard, among others. However, the changing market dynamics may push the issuance to March.
Fundraising Purpose
Goswami Infratech plans to use the raised funds for multiple purposes, primarily focusing on debt refinancing and corporate requirements. The company aims to refinance its outstanding high-yield notes maturing in April and another loan, while also addressing other debt-related and corporate purposes. This strategic refinancing approach reflects the company's efforts to manage its debt maturity profile and optimize its capital structure.
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