Shapoorji Pallonji Debt Faces Pressure As Investors Seek Exit Amid Refinancing Strains

Some bondholders of the Shapoorji Pallonji Group, India’s largest private credit borrower, are trying to sell debt linked to one of its subsidiaries as prolonged refinancing discussions test investor confidence, Bloomberg reported.

According to the report, traders in Singapore and Hong Kong have been offering non-convertible debentures issued by Goswami Infratech, an investment holding company within the SP Group, at around 90% of face value over the past two weeks.

While it is unclear whether actual transactions have taken place, such pricing typically signals rising concern in credit markets, even if it is not yet considered distressed.

The investment arm of the group has been in talks with creditors to delay repayment of notes worth ₹8,343 crore (about $884 million), which are due this month.

Some investors holding relatively smaller positions, in the range of $100 million or less, have reportedly been looking to reduce or exit their exposure.

Shapoorji Pallonji Group is a closely tracked name in India’s growing private credit market and is also significant in the broader economy, employing more than 37,000 people.

Founded in 1865, the group has been involved in major infrastructure and construction projects, including the building housing the Reserve Bank of India.

It gained further global attention last year when it raised $3.4 billion from investors such as Ares Management and Cerberus Capital Management.

However, the group has faced liquidity challenges since the pandemic due to high debt levels, prompting asset sales and the listing of subsidiaries to ease financial pressure.

It has been actively working since late last year to refinance obligations and reduce near-term repayment risks.

Goswami Infratech is now seeking to extend its zero-coupon bonds beyond the June 30 maturity date.

These bonds are partially backed by Shapoorji’s 18.4% stake in Tata Sons, the Tata Group’s holding company.

The value of this stake is influenced by market performance of Tata Consultancy Services, which has recently faced pressure amid a broader tech-sector selloff.

The bonds were originally issued in 2023 in India’s largest high-yield debt deal at an 18.75% yield.

They were extended once earlier with a 25 basis point consent fee, and current yields have now risen to 21.75%, reflecting increased risk perception among investors.