Fitch rates Shriram Transport Finance's proposed USD senior secured bonds BB(EXP)

Mumbai (Maharashtra) [India], Jan 6 Fitch Ratings on Wednesday assigned Shriram Transport Finance Company's (STFC's) proposed US dollar-denominated senior secured notes an expected rating of BB (EXP).
The proposed bonds will carry a fixed-rate coupon payable semi-annually and will be secured by a fixed charge over specified accounts receivable, in line with STFC's domestic secured bonds and rupee-denominated senior secured bonds issued overseas.
The proposed notes are also subject to maintenance covenants that require STFC to meet regulatory capital requirements at all times, maintain a net stage 3 asset ratio equal to or less than 7 per cent, and ensure its security coverage ratio is equal to or greater than 1x at all times.
The proposed notes will be issued in the international market by the company under the Reserve Bank of India's external commercial borrowings framework.
The proposed notes will be issued under STFC's 3 billion dollars global medium-term-note programme.
Most of the company's debt is secured and Fitch said non-payment of the company's senior secured debt will best reflect uncured failure of the entity.
STFC can issue unsecured debt in the overseas market but such debt is likely to constitute a small portion of its funding and thus cannot be viewed as its primary financial obligation.