MUMBAI, Oct 26: The country’s largest auto maker Tata Motors has raised USD 750 million from Asian and European investors by selling a dual tranche bond issue which got an over subscription of six times at USD 4.5 billion.
The company has priced the 5.5-year benchmark senior unsecured notes of USD 500 million at 4.625 per cent, while the coupon for the 10-year USD 250 million notes is fixed at 5.750 percent per annum.
It had sold USD 300 million worth bonds in April at a coupon of 5.53 per cent for a five-year money, indicating better operating environment for the company.
The proceeds from the issue will be used to refinance external commercial borrowings, capital expenditure and for general corporate purposes, the company said in a statement.
“We are pleased to have completed this transaction successfully and we thank the investors for demonstrating their confidence in us,” said Vijay Somaiya, vice-president for finance and head of treasury & investor relations at Tata Motors.
Global rating agency Standard & Poors has assigned BB long-term issue rating to the issue while highlighting Tata Motors’ increased dependence on JLR, while rival Moody’s has assigned Ba2 to the notes with a stable outlook.
“The ratings on Tata Motors reflect the company’s small size and narrow product suite compared with many global peers’, and its likely negative free operating cash flows because of high capital expenditure. JLR’s established and improving market position in the global premium automotive segment and its strong operating performance temper these weaknesses,” S&P said.
S&P further said it believes that the good operating performance of JLR, if sustained, can improve its consolidated financial strength.
Moody’s also based the ratings to the continuing good show by its British arm JLR which has contributed over 90 per cent of group operating profit in FY14. “The phenomenal success of JLR continues to buy time for Tata Motors’ weak domestic operations to turn around, and these are now showing some improvement.” (PTI)
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