MUMBAI: Tata Capital, the non-banking financial services arm of the Rs 32-crore Tata group, has raised $400 million by selling dollar bonds maturing in three-and-a-half years to investors in Asia and Europe. The first such product by the country’s largest conglomerate by market value.
The bonds will be sold to investors at a final price of 92 basis points above three-year U.S. Treasuries, which were trading at 4.47% on Tuesday, meaning the effective interest rate for lenders will be 5.39%, the people said. Ta.
“The bond’s final pricing is much tighter than the initial price guidance of 125 basis points for three-year U.S. Treasuries set by the company in the early days of Asian trade.The bond is the first issuance since 2016, so demand is It was a solid” Tata stable,” said a person familiar with the matter. The company confirmed the development in a notification to the stock exchanges.
The stock’s total order book has swelled to $2.5 billion, allowing the company to tighten pricing while maintaining $400 million in funding, above the $300 million it had previously planned to raise.
HSBC, MUFG, BNP Paribas and others were involved in the issue.
In February last year, global credit rating agency Fitch, backed by support from parent company Tata Sons and Tata Capital’s visibility as the largest company, upgraded India’s first long-term foreign currency rating to match its sovereign rating, ‘BBB’. -” was assigned to the company. The Tata Group’s financial services division is considered to be the growth engine of the group. Tata Sons owns 96.6% of Tata Capital. In late December, Standard & Poor’s (S&P) also assigned a “BBB-” rating to bonds sold under the company’s $2 billion medium-term note (MTN) program. ” Capital is required to maintain a minimum security coverage ratio of at least 1x for senior secured notes Tata Capital is required to maintain a regulatory capital ratio above the regulatory minimum and net There are also terms and conditions that require it. “Under the program, Tata Capital could have a non-performing asset ratio of less than 5%,” S&P said in a note.
NBFCs like Tata Capital have taken these steps after the central bank publicly expressed concerns over the growing bank exposure to the sector and raised risk weights to curb lending on some loans. Companies are diversifying their funding base as bank loans, their biggest source of funding, have become more expensive. For unsecured loans.
The company is considering raising dollar funding as part of its plan to diversify its liability base, Chief Financial Officer Rakesh Bhatia said last year. The funds raised will be used for the company’s financing business.
