Tata Capital eyes $750 million in fund raising through offshore bonds: Report

Tata Capital, the financial arm of Tata Group, is gearing up for its inaugural foray into international fundraising, aiming to secure approximately $750 million through offshore bonds or loans in the upcoming fiscal year beginning April, a senior company official told news agency Reuters on Wednesday.

Rakesh Bhatia, the Chief Financial Officer of the non-bank financial company (NBFC), highlighted the strategic intent behind the move, stressing on Tata Capital's commitment to diversifying its liability portfolio to fortify its financial standing. Bhatia indicated that the company expects commencing roadshows for the fundraising initiative by end of next month.

Bhatia underscored the potential consideration of dollar-denominated bonds, noting the heightened interest among overseas investors in Indian corporate entities. The resurgence in dollar bond issuances by Indian firms comes on the heels of a period marked by a 14-year low in 2023, attributed to Federal Reserve rate hikes, which elevated US yields impacting bond benchmarks.

The recent resurgence, evidenced by entities like State Bank of India, HDFC Bank, and Shriram Housing Finance raising a combined $2.1 billion in the initial two months of 2024, underscores the renewed vigour in Indian corporate fundraising on international markets.

Despite the absence of finalised details regarding tenor or quantum, Tata Capital has garnered an inaugural issuer rating of BBB- from both S&P Global Ratings and Fitch Ratings. With a loan book standing at approximately Rs 1.5 lakh crore, the company aims to sustain a growth trajectory exceeding 25 per cent in FY25, which will inevitably drive its borrowing requisites in tandem.

The evolving funding landscape for NBFCs, marked by heightened regulatory scrutiny and liquidity constraints, has prompted entities like Tata Capital to explore diverse avenues for capital acquisition. The Reserve Bank of India's directive mandating higher capital reserves on loans to NBFCs has propelled these institutions towards the bond market, albeit against a backdrop of tight liquidity conditions.

Against this backdrop, the corporate bond yield curve remains inverted, with short-term debt yields surpassing longer-term counterparts. Such dynamics have influenced the borrowing preferences of NBFCs, with a predilection towards bonds of sub-five-year maturity for enhanced asset-liability management.

(With Reuters inputs)