The term of the loan is likely to be five years. Its price can be 110 to 120 basis points above the guaranteed overnight funding rate (SOFR), the benchmark that replaced Libor. The deal is expected to be sealed in the coming weeks.
Tata Sons took out three loan tranches in 2018 to reduce the debt of Tata Teleservices, whose consumer mobile business was formally acquired by
in early 2020. The company would have obtained a one-time exemption for the use of money from these loans in the past. Banks and Tata Sons did not comment on this.
Tata Sons is not a frequent borrower in the overseas market, which Indian companies are increasingly turning to for loans. International bonds are no longer in vogue, with the benchmark US Treasury yield climbing 3.44% from 1.28% a year ago. The US Treasury serves as a benchmark for pricing international bonds. Piramal Pharma raises $225 million overseas loan, ET reported on September 13. now.
However, the cost of coverage makes a difference. If borrowers deploy some or all of the money overseas – a natural hedge in market parlance – international funds become cheaper than the domestic market.
Tata Sons is ranked among the highest ranked corporate borrowers in India.
“He decided to roll over the loan so that he could use the rupee money for the expansion of his business,” a market trader said.
The group would be looking for investment opportunities in metro projects, such as the one in Pune. He also focuses on digital forays into verticals, including technology, infrastructure, steel, telecommunications and automotive.
The Tata Group is a global enterprise made up of 30 companies in nearly a dozen verticals. It operates in more than 100 countries on six continents. Tata Sons is the principal investment holding company and promoter of the group’s operating companies. In FY22, revenue from Tata companies totaled $128 billion.
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