Shapoorji Pallonji Group secures lender approval to ease LTV covenant on $3.4 billion private credit debt
Lender Waiver Eases Shapoorji Pallonji's Debt Covenant Pressure
A unit of India's Shapoorji Pallonji Group has secured approval from its major lenders to ease a key debt condition after falling collateral values pushed it closer to its borrowing limits. Its financing arm, Porteast Investment, will temporarily raise its loan-to-value limit to 40 per cent from 34 per cent for four months through July 15.
The $3.4 Billion Porteast Facility
The $3.4 billion loan, raised last May at a steep yield of 19.75 per cent, counts large creditors such as Ares Management Corp., Cerberus Capital Management, Davidson Kempner Capital Management, Farallon Capital Management, and Deutsche Bank AG. This is the largest private credit deal in India till date and attracted significant interest from onshore and offshore private credit investors.
Collateral Pressure and Market Volatility
The request stems from market volatility due to geopolitical tensions and a sharp drop in Tata Consultancy Services (TCS) shares, a major part of the collateral. Tata Sons, the unlisted holding company of the Tata Group, gets much of its value from its stake in Tata Consultancy Services. SPG wants to raise the LTV limit from 34% to 40% for three months. This move comes after Tata Consultancy Services (TCS) stock, which backs about half of the Porteast bonds, fell 30% in the past year.
Timing and Refinancing Runway
Without a breather, the SP group risked breaching debt covenant just as it needs to refinance about $2.5 billion of rupee-denominated debt at its unit Goswami Infratech Pvt. due on April 30. The unit plans to raise up to $1 billion through its first dollar-bond sale, with the rest to be refinanced through local debt issued simultaneously.
The four-month waiver through mid-July provides a critical window for the group to execute its broader refinancing effort, which is part of its "Project Ascent" initiative announced in April. The Shapoorji Pallonji Group is set to close a ₹25,400 crore three-year debt raise by May 15 under its ongoing Project Ascent initiative, with annual coupons of around 18.75%.
About Shapoorji Pallonji Group
Founded more than 160 years ago, the SP Group operates across engineering and construction, real estate, infrastructure, energy and industrial projects. The group is controlled by the Mistry family and is best known for building landmarks such as India's central bank and the Al Alam Palace for the Sultan of Oman.