Next fiscal year, Tata Capital intends to raise $750 million in its first round of international financing

MUMBAI: A senior business official told Reuters on Wednesday that Tata Capital is exploring international fundraising for the first time and aims to raise around $750 million via offshore bonds or loans in the next fiscal year, which begins in April.
Chief financial officer Rakesh Bhatia of the non-bank financial corporation (NBFC) said, “The company may evaluate raising up to $750 million through overseas loans or bonds in FY25 as a part of diversifying its liability base.”

By the end of March, the corporation probably will begin roadshows for the same, he said.
“For overseas borrowings, we may also evaluate dollar bonds as there has been lot of interest by overseas investors in Indian corporates.”
In 2023, Indian corporates’ fundraising via dollar-denominated bonds reached a 14-year low of $4.1 billion as Fed rate rises dramatically increased the benchmark U.S. yield on which these bonds are based.
It has recovered in the last several months. In the first two months of 2024, State Bank of India, HDFC Bank, and Shriram Housing Finance together raised $2.1 billion using dollar bonds.
“As U.S. yields have eased and there are expectations of rate cuts, Indian companies are increasingly turning to overseas markets for fundraising,” Soumyajit Niyogi, a director at India Ratings, a completely owned part of the Fitch Group, said.
Tata Capital has not yet decided on the length or amount of its borrowing, but S&P Global Ratings and Fitch Ratings have given it a first-time issuer rating of BBB-.With a loan book valued at over 1.5 trillion rupees ($18.1 billion), the Tata Group firm hopes to expand it at a rate of more than 25% in FY25. It also anticipates an increase in its borrowing requirements.
Since the Reserve Bank of India ordered banks to reserve more capital for loans to NBFCs, forcing the latter to access the bond market, funding costs for NBFCs have increased.
The yield curve for corporate bonds has remained inverted due to tight liquidity circumstances, as the rates on short-term debt continue to exceed those on longer-term securities. NBFCs usually use bonds with maturities less than five years to manage their asset-liability.