Tata Sons listing push fails to lift SP Group dollar bonds
The bonds were quoted around $100.226 Tuesday, as against $100.264 at the previous close, according to Bloomberg data. The regulatory push to make Tata Sons list its shares is expected to allow the SP Group to monetise at least a part of its more than 18% stake in the Tata Group holding company and help reduce balance sheet pressures.
“There hasn’t been any meaningful rally in the bonds because the market sees this (monetisation of Tata stake) as a long-drawn process,” said a person familiar with the debt. “While the development is positive for the SP Group, there are still several steps before it translates into an actual liquidity event.”
Shapoorji Pallonji Group’s dollar notes saw little change Tuesday. A potential Tata Sons listing could unlock liquidity for the debt-heavy group. Investors view monetizing the Tata stake as a long-drawn process. Thin trading volumes also limited any immediate price reaction. Clarity is awaited on how this development translates into actual liquidity.
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Trading volumes in the rupee bonds also remained thin, limiting any immediate price reaction, people familiar with the market said. The group’s rupee bond was offered at par with an 18.75% yield. While the latest development improves the group’s position from where it stood earlier, investors have yet to price in a near-term monetisation of its Tata Sons holding, they said.
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The notes were issued by Mercury Finance Company, a Mauritius-based special purpose vehicle, as part of the SP Group’s recent dual-currency refinancing. Mercury issued $650 million of 14.5% notes due 2029, with the proceeds primarily used to subscribe to rupee-denominated non-convertible debentures issued by Eqyizen Investment, a promoter-group entity.
The muted reaction is different from expectations that a favourable development around Tata Sons could provide an immediate mark-to-market benefit to the SP Group debt. Investors, however, appear to be waiting for greater clarity on whether and how the development ultimately leads to liquidity for the group, people familiar with the matter said. The offshore notes formed part of a ₹21,350 crore financing completed by the group through Eqyizen Investment. The financing was raised to refinance existing debt of group entities and meet capital requirements.
