Through its first international bond with a 5.38 percent interest rate, Tata Capital Ltd., the financial services division of the Tata group, has raised $400 million. The proceeds of the senior unsecured bond, which has a 3.5-year tenor, will be used for lending and other commercial operations.
In a late-night press statement, Tata Capital stated that because of the strong investor demand, the deal was initiated with an initial price guide of US Treasury (UST) + 125 basis points (bps). The company was able to tighten pricing by 33 basis points to UST 92 basis points with the assistance of strong book building and excellent investors.
According to Rajiv Sabharwal, Managing Director and Chief Executive Officer of Tata Capital, the transaction's performance demonstrates that investors believe in the company's strong credit profile, which is reinforced by its emphasis on a diverse and thorough loan portfolio. "The deal will diversify our funding sources and further strengthen our liability profile," he added.
The company met with international investors in London, Singapore, and Hong Kong. Investor demand for the bond was so high that the final order book was more than four times oversubscribed. According to the corporation, the transaction involved asset managers, banks, insurance companies, and other foreign investors from Asia and the EMEA region.
J.P. Morgan was the joint bookrunner for this transaction, together with BNP Paribas, HSBC, Standard Chartered Bank, andt the senior unsecured notes will be Tata Capital's direct, unconditional, and unsubordinated debt. They will always be ranked on par with the finance company's other senior unsecured obligations.
For the senior secured notes, Tata Capital is required to maintain a security coverage ratio of at least 1.0x. Covenants also require Tata Capital to have its net non-performing assets ratio below or equal to 5% and its regulatory capital ratios above the regulatory minimum.
