The first tranche of $15 million was executed after receiving regulatory approval on October 15, while the balance of $10 million is scheduled for execution in November, said Muthoot Microfin’s chief executive officer. sadaf saeed Told.
The effective cost of borrowing comes to 11.3%. Pricing is 500 basis points higher than the Secured Overnight Financing Rate (SOFR), which is 2.28%, and includes hedging costs.
“ECB allows us to borrow long term funds for 5-7 years which helps in building a positive asset liability profile. This allows us to rotate the facility twice hence justifying the additional cost of 75-100 basis points.” Sayed Told ET.
“It also helps us diversify our responsibility mix,” he said.
Lender, Kerala based microfinance branch Muthoot Pappachan The group is exploring the possibility of more ECBs in the near future. Recent rating upgrade by CRISIL The rating of its long-term bank facilities and loan programs can help it reduce borrowing costs.
“Our improved rating will help us access cheaper debt and allow us to borrow from new sources of capital such as ECBs or retail non-convertible debentures.NCD), which will help us build a bigger portfolio and expand our customer base,” said Sayeed.
It currently has 21 crore subscribers.
NBFC-MFIs raised Rs 3,297 crore between April and September, almost three-fourths of which came in the second quarter. The company’s total NCD dues has crossed Rs 1,000 crore and the company is aiming to double it by the end of the current financial year.
The rating upgrade is in line with Muthoot Microfin’s substantial capitalization, long track record and above average earnings profile. UK in the last week of September Greater Pacific Capital With an investment of $10 million, Muthoot increased its stake in Microfin from 14.37% to about 16%.
“Decreased asset quality, geographic concentration in MML’s portfolio and the sensitivity of the microfinance sector to various regulatory and legislative risks partly offset the above strengths,” Crisil said.
However, the rating company said that the pace of growth of MFIs has picked up from July 2021 after the second pandemic wave. The lender’s assets under management rose to Rs 7,400 crore at the end of September from Rs 6,238 crore six months earlier.