June 22, 2024
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Hero Fincorp: First Indian Company to Obtain a New Benchmark Loan

Hero FinCorp has become the first Indian company to raise a secured overnight financing rate (SOFR)-linked syndicated loan.

The non-bank finance company, promoted by Hero MotoCorp, raised $350 million (approximately Rs 2,631 crore) at 168 basis points above SOFR, a new international benchmark that replaced the London Interbank Offered Rate or LIBOR on January 1. Through a circular issued on July 8, last year, the Reserve Bank of India instructed banks to stop writing contracts in the LIBOR on December 31, by the global phaseout of that benchmark rate.

Though Indian corporations have raised overseas loans linked to SOFR since the beginning of the year, Hero FinCorp is the first to raise a syndicated loan marked to the new charge. According to market experts, loans of this type may become more common amongst a wide range of debtors.

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