Tata Steel, the country's oldest steelmaker, on Friday said it has raised $1.3 billion by the issuance of unsecured bonds in the international markets.
The issue comprises $300 million at 4.45 per cent unsecured bonds due on July 24, 2023 and $1 billion at 5.45 per cent Unsecured Bonds due on January 24, 2028, by Abja Investment Co Pte Ltd, a wholly owned subsidiary of Tata Steel based in Singapore.
"Based on the buoyant trading performance of the existing bonds and strong credit appetite from quality investors, the company launched an innovative bond structure. The success of the issue demonstrates the investor's confidence in the long-term strategy of the company and we are very happy with the quality of the investors in the issue," the release quoted Koushik Chatterjee, executive director and chief financial officer as saying.
Roadshows were organized simultaneously in Dubai, Singapore, London and Hong Kong and on the back of overwhelming investor response, the transaction was launched on Jan 18, 2018. By the time books closed at the end of the day, the peak order book was in excess of $7 billion across tranches. The tremendous response enabled the issue to be priced about 42 basis points tighter than the initial price. The deal was distributed to a wide number of long-term buy-and-hold institutional investors, banks and private banks across regions.
"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. The completion of the refinancing also marks an important step forward to create a sustainable financial structure in preparation of the proposed joint venture in Europe," said Chatterjee.
Tata Steel is among the top global steel companies with an annual crude steel capacity of 27.5 million tonne. Geographically diversified Tata Steel has operations in 26 countries and commercial presence in over 50 countries. Since the last couple of years the company has been making untiring efforts to lighten its balance sheet with raising funds overseas being one of the tools.