Shapoorji Pallonji’s private credit loan has become more expensive, with the interest rate rising to 21.75%. The increase affects about ₹28,500 crore ($3.3 bn) of debt that is backed by a part of Tata Sons’ shareholding.
What triggered the rate jump?
The higher rate was caused by a step‑up clause in the loan agreement. The clause activates when a borrower, Goswami Infratech, fails to finish a planned refinancing by the end of December. Because the refinancing was delayed, the existing loan had to be re‑priced at the higher cost.
Current repayment status
- Shapoorji Pallonji has partially repaid the debt using money raised from Afcons Infrastructure’s listing and the sale of two ports.
- About $1.7 bn of the loan is still unpaid.
- In December, the group raised fresh bridge debt at the same 21.75% rate.
- Retail investors who were owed money by Goswami were paid in full using the new bridge facility.
Future outlook
The higher rate is expected to drop again once Goswami completes its refinancing, which the lenders hope to finish by March. The group is also talking to banks about raising another $2.5 bn of debt. The pricing of that new loan will depend on how the ongoing settlement talks with Tata Sons turn out. A successful share sale could lower borrowing costs further.
Key take‑aways for investors
- The step‑up clause shows how loan agreements can protect lenders when borrowers miss milestones.
- Even with the rate hike, lenders stayed willing to fund the group because of the strong collateral, which includes Tata Sons’ stake, real‑estate assets and an oil‑and‑gas business.
- Any improvement in the settlement with Tata Sons could make future borrowing cheaper for Shapoorji Pallonji.
Remember, this is perspective, not a prediction. Do your own research and consider your risk tolerance before making any investment decisions.