Tata Capital raises $400 mn from international bond markets

Tata Capital Ltd, Tata Group’s NBFC (Non-Banking Finance Company) arm, has announced raising $400 million through its maiden issuance from international bond markets, maturing in 3.5 years for investors in Asia and Europe. The company says it will pay an interest of 5.38% on the dollar-denominated bonds. Tata Capital engaged with global investors in Hong Kong, Singapore and London.

“Tata Capital Limited, has successfully raised USD 400 million Fixed Rate Senior Unsecured Reg S Bond for a 3.5-year tenor at an interest rate of 5.389%,” the company states. Reg S bonds are bonds that are not required to be registered with the US Securities and Exchange Commission (SEC).

Driven by strong investor interest, the deal was launched with an initial price guidance of US Treasury plus 125 bps (basis points). “Following a strong book building, supported by high quality investors, the Company was able to tighten pricing by 33bps to UST + 92 bps.”

Buoyed by a strong response from investors, the company notes that the final order book oversubscribed above 4 times. The deal attracted global investors from Asia and EMEA (Europe, the Middle East and Africa), including asset managers, insurance companies, banks and other entities.

Transaction milestones: It was the first Investment Grade rated issuance by a Tata Group company and the first by an Indian private-sector NBFC. Additionally, it achieved the tightest spread over US Treasuries for a 3/3.5-year US denominated, public, fixed-rate bond issuance by a BBB-rated issuer from South and South East Asia.

BBB-rated issuers are classified as investment-grade, indicating their stability.

Noting the confidence of investors, Rajiv Sabharwal, managing director and CEO of Tata Capital said, “The success of the transaction illustrates the confidence of investors in Tata Capital's strong credit profile, backed by its focus on a diversified and granular loan book. The transaction will further strengthen our liability profile and diversify our funding sources.”

In February last year, Tata Capital was reportedly exploring its first global fundraising for FY 2024-25.

BNP Paribas, HSBC, Standard Chartered Bank and MUFG served as the joining global coordinators and bookrunners, with JP Morgan acting as a joint bookrunner.