Tata Motors said today it had raised INR42bn (US$840million) through the issue of secured non-convertible rupee debentures. The funds raised will be used for part repayment of the $3bn bridge facility taken for acquiring Jaguar Land Rover. Tata Motors had earlier prepaid $1.11bn.

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This debenture issue, which is among the largest by an Indian corporate, is first of its kind for the Indian capital markets. The debentures, issued in four tranches with maturities ranging from 23 to 83 months, carry a coupon of 2% and will be redeemed at varying premia on maturity. All the tranches are guaranteed by the State Bank of India (SBI).


C Ramakrishnan, chief financial officer of Tata Motors, said: “The issue was quite a success and well oversubscribed. The issue structure effectively met the company’s requirement of tenors, cost and servicing. We thank the investors, guaranteeing banks and our advisors for their support and confidence in the company.”


The issue attracted interest from a wide base of institutional investors comprising mutual funds, banks, insurance companies and financial institutions. A book building process was followed for price discovery and the maturity yields were fixed at 6.75% p.a. for the 23 month tranche, 8.40% p.a. for the 47 month tranche, 8.45% p.a. for the 59 month tranche and 10% p.a. for the 83 month tranche.


Citigroup and Tata Capital were lead arrangers for the debenture issue and SBI Capital Markets was the joint lead arranger.

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While SBI issued the master guarantee of INR49bn in favour of the debenture trustee, 10 other Indian banks participated in the facility through counter guarantees provided to SBI. SBI Capital Markets was lead arranger for the guarantee syndication and Citigroup along with Tata Capital were the joint lead arrangers.


Earlier, Tata Motors was reported to have sold INR12.5bn (US$262m) of bonds to state-owned Life Insurance Corporation of India, two banking sources with knowledge of the deal told Reuters.


The seven-year notes carry a coupon rate of 10%. The deal was guaranteed by the State Bank of India, the bankers said.


“It was sanctioned last month and was awaiting SBI guarantee,” one source said.