Tata Capital has raised $400 million through unsecured notes maturing in three and a half years at a coupon of 5.389%, marking its first ever overseas bond issue, the company said in a press release.
Investors from around the globe including Hong Kong, Singapore and London participated in the bond issue. These were largely asset managers, insurance companies, banks and others.
"Following a strong book building, supported by high quality investors, the company was able to tighten pricing by 33bps to UST + 92 bps," the press release said. UST stands for US Treasury yield.
The bond issue received an overwhelming response from investors, with the final order book subscribed over four times. The bonds were rated BBB- by Fitch Ratings.
BNP Paribas, HSBC, Standard Chartered Bank, MUFG and J P Morgan were lead managers for this bond issue.
"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," Managing Director and Chief Executive Officer Rajiv Sabharwal said.
News reports have suggested that Tata Capital will likely also tap the primary equity markets with an initial public offering this year. According to Reserve Bank of India's requirements, the company must mandatorily list by September 2025.
This has also come as several non-banking financial companies have tapped the offshore debt market to raise funds after the Reserve Bank of India in November 2023 increased risk weights on bank lending to NBFCs.
Growing interest from global investors and weak appetite in the domestic market has also driven financial services companies to the overseas market for their funding needs.
External commercial borrowings by Indian corporations rose to $2.8 billion in November, sharply higher than $1.14 billion in the same period a year ago, according to data from the RBI.
Merchant bankers expect this trend to continue with issuers such as PNB Housing Finance, Shriram Finance and Cholamandalam Investment and Finance Co lining up their offshore borrowings in 2025.
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