Tata Steel raises $1.3 billion via dollar bonds at a tighter price

MUMBAI - Tata Steel has raised 1.3 billion by selling dollar-denominated bonds to overseas investors, who rushed to grab the high-yielding securities. The company has obtained oversubscription in excess of $7 billion reflecting strong investment appetite for such papers.

The bonds were in two tranches including $300 million with 5.5 year maturity and $ 1 billion with 10-year maturity. They have offered 4.45% and 5.45% respectively.

“The proceeds of the bonds will be used to refinance the offshore obligations of the group, which will help de-risk the balance sheet, enhance financial flexibility, diversify the investor base and improve the overall debt maturity profile,” said Koushik Chatterjee, ED and CFO of Tata Steel in a release on Friday.

Last week, ET reported, Tata Steel was set to raise a $1-billion bond issue as part of a mega financing exercise to streamline its international balance sheet before its European joint venture with Thyssenkrupp kicks off.

“The tremendous response enabled the issue to be priced about 42 bps tighter than the initial price thoughts on both the tranches,” the company said in a release.

Over a dozen global banks have been mandated for the issue. They include BofA Merrill Lynch, JPMorgan, HSBC, StanChart, Barclays, Morgan Stanley.

Abja Investment Co Pte Ltd, a wholly owned subsidiary of Tata Steel was the actual issuer of the bonds, rated as BB- by S&P, two notches lower than investment grade. Those will be listed on the Singapore Exchange (SGX).

The deal was distributed to a wide number of long term institutional investors, banks and private banks across regions.

The bond-sale is known as Regulation S, where are bonds are offered to investors outside investors.