In order to fund its Rs 35,000 crore steel plant project in Odisha and also to reduce its debt, Tata Steel plans to raise $1 bn through issue of bonds in the international market by the end of March.
The firm plans to raise fund through global bond issue because this may turn out to be a cheaper option for the expansion project given that rupee debt is expensive at over 10.5 percent.
The company may pay an interest of 5-6 percent on the bond and even if one includes the expense of forex hedging, dollar bond issue would still be cheaper than raising rupee debt.
The bond issuance is expected to have a tenure of 10 years at the rate of 5-6 percent. Banks like Deutsche Bank, BNP Paribas, Standard Chartered are said to be the advisors to the fund raising plan.
Some reports indicate that the Tata Group firm may use part of the funds to refinance some debt. Tata Steel has a consolidated debt of Rs 63,300 cr as reported in Q2FY13.
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