Tata Sons to raise $500 mn in offshore loan, backed by BofA, SMB

Tata Sons will raise $500 million in offshore borrowings, backed by Bank of America, SMBC of Japan and Standard Chartered Bank as the company rolls over debt used to fund Tata Teleservices several years ago, reported The Economic Times on Thursday, quoting people familiar with the matter. 

The loan deal, the tenure of which is likely to be five years, is expected to be finalished in the coming weeks. It will likely be priced 110-120 basis points above the Secured Overnight Financing Rate (SOFR), reported ET. 

To cut debt at telecom firm Tata Teleservices, Tata Sons in 2018 took three loan tranches and the company had reportedly obtained a one-off dispensation for the usage of money in the past, stated the report. 

Bharti Airtel acquired the consumer mobile business of Tata Teleservices Ltd (TTSL) in July 2020. 

The development comes at a time when Indian firms are increasingly tapping overseas markets for loans. While Piramal Pharma is raising a loan of $225 million from offshore markets, HDFC Bank, India's largest private lender, raised $1.1 billion nearly two months ago. 

Tata Sons, one of India's best-ranked corporate borrowers, "has decided to roll over the loan so it can use the cash in rupee terms for business expansion," a market dealer told the newspaper.

Tata Group is reportedly seeking to invest in metro rail projects, including in Pune, while the company is focusing on digital forays across verticals, including technology, infrastructure, steel, telecom, and automotive, reported ET.