Tata Steel raises $1.5 billion in overseas bond sale

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As part of its strategy to mop up capital internationally, Tata Steel has raised $1.5 billion (about Rs 9,000 crore) in a dual tranche bond sale, making it the largest such deal by the Tata group firm.

"This is Tata Steel's debut US Dollar bond issuance and forms part of the company's long-term financing strategy to raise capital internationally," said Koushik Chatterjee, Group Executive Director (Finance and Corporate) at Tata Steel.

The proceeds would be deployed as per the strategic plan of the company, including offshore investment, he added.

The dollar money was raised by the company's wholly-owned subsidiary in Singapore, ABJA Investments, and the peak order book of the issue was $ 11 billion across tranches, it said.

The dual tranche includes $ 500 million unsecured bonds with a coupon rate of 4.5 per cent due on January 31, 2020 and the remaining $ one billion 10-year bond carrying a coupon rate of 5.9 per cent.

"It was heartening to get such an enormous response from high quality investors across Asia, Europe and Middle East. The successful bond issue enables the company to diversify the investor base, lengthen maturity profile and optimise the financing and capital structure," Chatterjee said.

Roadshows for the issue were organised simultaneously in Hong Kong, Singapore and London and on the back of overwhelming investor response, the transaction was launched on July 24.

"By the time books closed at the end of the day, the peak order book was $ 11 billion across tranches... The deal was distributed 59 per cent into Asia and 41 per cent into EMEA and others to a wide number of long term buy-and-hold institutional investors, banks and private banks," it said.

The Tata Steel issue is the second-largest bond issue from the country after ONGC Videsh, the international arm of oil major ONGC had earlier this month mopped up a whopping $ 2.3 billion in a dual tranche issue.

Tata Steel, which is the top producer of the alloy in the country, has been trying to pare its huge debt to lower interest costs and has a headroom to raise $ 3.2 billion for debt repayment through refinancing.

The company has to repay $ 5 billion worth of debt by the end of 2015. According to the balance-sheet, the company has over $ 14.4 billion of bonds and loans outstanding.

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