Tata Motors plans Rs3750-crore bond issue: report

28 April 2009

Tata Motors aims to sell Rs3750 crore ($745 million) worth of bonds in May to close a bridge loan.

Tata Motors, which began bookings for the world's cheapest car, Nano, this month, will sell bonds in the domestic market between mid and late May in maturities of two, four, five and seven years, Reuters reported quoting three unnamed banking sources.

India's top vehicle maker took a $3 billion loan to buy the Jaguar and Land Rover brands from Ford before the credit crunch hit last year. The company, which has $100 million in cash, has to close the residual $2 billion loan in June.

The bonds will be guaranteed by the country's biggest lender, the State Bank of India, to help Tata Motors tide over rating downgrades, the report said. The company declined to comment officially.

"The book is being built and the response has been robust so far," one source said, adding the five-year tenure will carry a coupon of 7.5 to 9 per cent, compared with up to 11 per cent Tata Motors had offered for one-year paper.

The global economic crisis has hit the company hard, reducing demand for its mainstay trucks and buses, hurting margins and affecting its fund raising plans.