Tata Group Firms Eye Bond Market Return as Borrowing Costs Ease
Synopsis
Tata Steel and Tata Projects are preparing to return to India's corporate bond market after more than 15 months, according to merchant bankers. Tata Steel is expected to raise ₹30 billion through five-year bonds, while Tata Projects could raise between ₹5 billion and ₹10 billion via three-year and five-year debt offerings. The move comes as corporate bond yields have fallen following the Reserve Bank of India's decision to keep rates unchanged. Market participants say both companies are waiting for borrowing costs to ease further before launching their planned bond issuances.
Tata Steel and Tata Projects to sell bonds
Two Tata Group firms, both focusing on infra, plan to hit India's corporate bonds market days after a 15-month gap, as hinted at by two merchant bankers who are privy to the plans.
Tata Steel will likely issue five-year bonds to generate around 30 billion rupees (around US$313.23 million). Tata Projects may float a mix of three-year and five-year debt papers to raise Rs 5,000-Rs 10,000 crore.
Companies Waiting for Lower Rates
Both companies have notified merchant bankers about their intention, but are waiting for rates to soften further before they go ahead with the bond sales, a banker said.
Both firms have made merchant bankers aware of their intentions and are keeping an eye on market conditions before launching the bond sales, a managing director said. The banker said they are holding off until the cost of borrowing comes down more before going to market.
Bond Market Conditions Improve
The planned fund raise follows easing of Indian corporate bond yields after the Reserve Bank of India's decision to keep key policy rates unchanged in a review last week.
According to LSEG data, yields on AAA-rated corporate bonds with maturities between two and five years had climbed above 8% for the first time since early 2019 before the RBI's announcement. Yields have since decreased by around 50 basis points, easing the pain for borrowers.
Previous Bond Issues
Tata Steel now has more than ₹150 billion of bonds in issue and on Friday, it faces a bond worth ₹10 billion that matures. The last time the company accessed the bond market was in February 2025 when it raised ₹30 billion via five-year bonds with a coupon of 7.65%.
A few months earlier in the same month Tata Projects, recently rated AA, raised 5 billion via 6 year bonds at an 8.60% coupon rate.
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