Tata Motors raises $750-mn in bond sale
27 Oct 2014
Tata Motors Ltd has raised a total of $750 million by selling bonds to Asian and European investors in a transaction that closed on Friday. The sale included $500 million of bonds maturing in five and a half years years and another $250 million in ten-year bonds.
Tata Motors Ltd, the country's largest auto maker, said the dual tranche bond issue received subscription of $4.5 billion - six times the offer of $750 million.
The ve and a half years senior unsecured notes for $500 million were priced at 4.625 per cent while the 10-year $250 million notes had a coupon of 5.750 per cent per annum.
Tata Motors had sold $300 million worth of bonds in April at a coupon of 5.53 per cent for a 5 year maturity, indicating better operating environment for the company.
Citibank NA, Credit Suisse Group AG, Australia and New Zealand Banking Group Ltd (ANZ) and Standard Chartered Plc were the bankers to the issue. Tata Motors confirmed the bond issuance in a press release.
''The proceeds from the issuance and sale of the notes will be used to refinance external commercial borrowing of the company, incur new additional capital expenditure and for general corporate purposes,'' the company said.
''We are pleased to have completed this transaction successfully and we thank the investors for demonstrating their confidence in our company,'' Vijay Somaiya, vice-president, finance and head treasury and investor relations, Tata Motors was quoted as saying in the release.
Asia-based investors dominated the 5-1/2-year issue cornering 61 per cent of the bonds sold while the 10-year issue was largely lapped up by investors based out of Europe and the Middle East which cornered 78 per cent of the share.
Mutual funds bought 69 per cent of the 5-1/2-year bonds and also bought 50 per cent of the 10-year bonds, Bloomberg said, adding that insurers bought 40 per cent of the 10-year bond.
Tata Motors could use this money to invest in its hot selling UK based luxury car brand Jaguar Land Rover Automotive Plc (JLR).