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Print[Ferro-alloys.com] Tata Group's metal company Tata Steel is planning to raise $1 bn via global bond issuance by the end of March, sources with direct knowledge said. The bond issuance is expected to have a tenure of 10 years at the rate of 5-6%. Banks like Deutsche Bank, BNP Paribas, Standard Chartered are said to be the advisors to the fund raising plan.
Tata Steel is expected to use a part of the funds raised to finance the Odisha steel project. The total project cost is estimated to be around Rs 35,000 crores. This may turn out to be a cheaper option for the expansion project given that rupee debt is expensive at over 10.5%. Funds raised via bonds at 5-6%, with expense of forex hedging will still be cheaper than raising rupee debt.
The steel major may also choose to use part of the funds to refinance some debt, a source said. Tata Steel has a consolidated debt of Rs 63,300 cr as reported in Q2FY13.
Tata Steel said, "We will not be commenting on a financial strategy plan. We will disclose it when appropriate."
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