Tata Motors aims to sell Rs3750 crore ($745 million) worth of bonds in May to close a bridge loan.

Tata Motors, which began bookings for the world's cheapest car, Nano, this month, will sell bonds in the domestic market between mid and late May in maturities of two, four, five and seven years, Reuters reported quoting three unnamed banking sources.

India's top vehicle maker took a $3 billion loan to buy the Jaguar and Land Rover brands from Ford before the credit crunch hit last year. The company, which has $100 million in cash, has to close the residual $2 billion loan in June.

The bonds will be guaranteed by the country's biggest lender, the State Bank of India, to help Tata Motors tide over rating downgrades, the report said. The company declined to comment officially.

"The book is being built and the response has been robust so far," one source said, adding the five-year tenure will carry a coupon of 7.5 to 9 per cent, compared with up to 11 per cent Tata Motors had offered for one-year paper.

The global economic crisis has hit the company hard, reducing demand for its mainstay trucks and buses, hurting margins and affecting its fund raising plans.

But the worst may be over. Its March sales fell 13 per cent on year but rose nearly a quarter from February. The Nano bookings, with buyers having to fork out about 95 per cent of the Rs100,000 base price, would also give the firm easy, interest-free money.

Nano numbers on Tuesday
Tata Motors is expected to disclose the number of bookings it has got for the Nano on Tuesday. An unconfirmed report in the Business Standard says the Mumbai-based company may have got 1 million orders for the Nano.

Tata Motors is guaranteeing the cheapest price for only the first 100,000 cars, betting that the economic slowdown will lure customers even though deliveries won't be completed for more than a year. Bookings for the Nano opened 9 April and closed 25 April.

Conceived in 2003, discussed for several years and six months delayed from its originally scheduled debut thanks to the company's plant at Singrur being caught in a political crossfire between the opposition Trinamul Conghress and the ruling Left Fron, the Tata Nano specifications are unique: It's a four-door, five-seat, 10-foot automobile with a 2-cylinder, 33-horsepower, 624cc engine, with a five-speed (four forward) manual transmission.