Lodha Group Subsidiary Plans $100-million Overseas Bonds

Realty developer Lodha Group’s wholly-owned subsidiary Lodha Developers International is raising around $100 million through an overseas issue of bonds. The proceeds will help repay intra-group debt due from its London projects to Indian operations.

This is the second offshore fund raising by an Indian company after international rating agency Moody’s Investors Service upgraded India’s sovereign rating to Baa2 from Baa3 and changed the outlook to ‘stable’ from ‘positive’.

Through this refinancing, the developer may lower its borrowing costs by 25 to 75 basis points, bond dealers said.

JP Morgan, UBS and Citi are some of the investment bankers said to be helping the developer raise funds. Individual banks could not be contacted immediately for comments. Lodha Group declined to discuss the proposed bond sale.

According to rating agencies Moody’s Investors Service and Fitch Ratings, Lodha’s issue will help ease onshore refinancing risk. “The proposed offering will moderately extend Lodha Developers’ debt maturity profile, as it will use the proceeds to refinance existing short-term debt,” said Saranga Ranasinghe, Moody’s Assistant Vice-president and Analyst. “The refinancing will also lower its interest costs due to the higher interest rates of the debt that is being refinanced.”

According to Fitch, Lodha reported robust property pre-sales of Rs 3,660 crore and cash collections of Rs 4,470 crore for the six months ending September 2017.

Fitch Ratings believes the proposed tap issue of its 12% senior unsecured US dollar notes due in 2020 will lower its near-term onshore refinancing requirements, as the company plans to use the proceeds to repay intra-group debt due from its London projects to its Indian operations.