TATA MOTORS RAISES $425 MN VIA OFFSHORE BONDS TO MEET EXPENSES

Automaker Tata Motors has raised $425 million through unsecured offshore bonds at a rate of 4.35% to refinance existing debt and meet expenses, according to a term sheet of the deal seen by Reuters.

In a statement to the stock exchange, the company confirmed the fund raising and said it will use $318 million of the proceeds to refinance existing loans and the rest to meet corporate expenses. The bonds have a maturity date of June 2026, it said.

Tata Motors said it received “significant interest from investors across Asia and Europe” with the bond issue over-subscribed by over five times.

The bond issue has a ‘B’ rating from Standard & Poor’s Ratings Service.

In India, a Aaa-rated staterun firm would need to pay around 5.9% for raising 5 year funds at the current levels, making offshore fund raising attractive despite the currency conversion costs. Offshore sales also enable bond issuers to raise larger sums and diversify their debt-investor base.

About two dozen Indian companies collectively raised $14.01 billion abroad in 2020, down from $26.5 billion the previous year, according to a global analytics firm.

Tata Motors had net automotive debt of $5.6 billion at the end of last fiscal year through March 31. The company said in 2020 it plans to be net debt free at the end of three years.