Fitch Ratings has assigned India-based Manappuram Finance Limited's (MFIN, BB-/Stable) USD300 million 7.375% senior secured notes due 2028 a final rating of 'BB-'.

This follows the receipt of final documentation conforming to information previously received. The final rating is in line with the expected rating assigned on 29 April 2024.

The notes follow an amortising structure for repayment in five instalments, with repayments starting in May 2026 until the final repayment in May 2028. The notes carry a fixed-rate coupon payable semi-annually and are secured by collateral, which includes the issuer's specified assets and receivables.

The notes are also subject to maintenance covenants that require MFIN to ensure the security coverage ratio is at or greater than 1x at all times. The notes are issued in the international market under the Reserve Bank of India's external commercial borrowings framework. They are issued under MFIN's USD750 million secured medium-term note programme.

Key Rating Drivers

MFIN's notes are rated at the same level as its Long-Term Foreign-Currency Issuer Default Rating (IDR), in accordance with Fitch's rating criteria.

Most of MFIN's debt is secured and Fitch believes that non-payment of the company's senior secured debt would best reflect the uncured failure of the entity. MFIN can issue unsecured debt in the overseas market, but such debt is likely to constitute a small portion of its funding and thus cannot be viewed as its primary financial obligation.

See Fitch Affirms Manappuram Finance at 'BB-'; Outlook Stable for more information on MFIN's key rating drivers and rating sensitivities.

RATING SENSITIVITIES

Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade

Any negative action on MFIN's Long-Term Foreign-Currency IDR would drive similar rating action on the notes.

Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade

An upgrade of MFIN's Long-Term Foreign-Currency IDR would result in corresponding rating action on the notes.

Date of Relevant Committee

01 September 2023

REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING

The principal sources of information used in the analysis are described in the Applicable Criteria.

ESG Considerations

MFIN has an ESG Relevance Score of '4' for Customer Welfare - Fair Messaging, Privacy and Data Security, due to a history of customer-related business practices that did not fully comply with regulatory norms. The score reflects our assessment that customer-related practices appear weaker than at rated peers, raising regulatory and reputational risk for MFIN. This has a negative impact on the credit profile and is relevant to the ratings in conjunction with other factors.

MFIN has an ESG Relevance Score of '4' for Governance Structure, due to its history of customer-related business practices that did not fully comply with regulatory norms, which implies that the company has gaps in its governance structure. The score reflects our assessment that governance practices appear weaker than at rated peers, raising regulatory and reputational risk for MFIN. This has a negative impact on the credit profile and is relevant to the ratings in conjunction with other factors.

The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. For more information on Fitch's ESG Relevance Scores, visit www.fitchratings.com/topics/esg/products#esg-relevance-scores

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