Fitch Ratings has assigned India-based Shriram Transport Finance Company (STFC) proposed senior secured US-dollar denominated notes an expected rating of 'BB+(EXP)'.

The proposed bonds will carry a fixed-rate coupon payable semi-annually and will be secured by a fixed charge over specified accounts receiveable, in line with STFC's domestic secured bonds and rupee denominated senior secured bonds issued overseas. The notes are also subject to maintenance covenants that require STFC to meet regulatory capital requirements at all times, maintain net non-performing loan (NPL) ratio equal to or less than 7%, and ensure its security coverage ratio is equal to or greater than 1 at all times. The notes are expected to carry maturites of three to five year.

The US dollar denominated notes will be issued in the international market by the company under the Reserve Bank of India's New External Commercial Borrowings (ECB) framework issued in January 2019.

Key Rating Drivers STFC's proposed bonds are rated the same level as its Long-Term Foreign-Currency Issuer Default Rating of 'BB+' in accordance with Fitch's rating criteria.

Most of STFC's debt is secured and Fitch considers that non-payment of the company's senior secured debt would best reflect uncured failure. STFC 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.

For more information on the Key Rating Drivers and Rating Sensitivities on the company, please see "Fitch Affirms India's Shriram Transport Finance at 'BB+'; Outlook Stable," published 20 December 2018.

Rating Sensitivities The rating on the proposed bond will move in tandem with STFC's Long-Term Foreign-Currency Issuer Default Rating.