MUMBAI: Tata Capital, which after the merger with the group company Tata Motor’s NBFC subsidiary has become the 12th largest non-bank player in terms of AUM, is tapping the global debt market to raise up to $2 billion as part of its medium-term notes (MTN) programme.
Global rating agency S&P on Monday assigned a BBB- rating to the issue.
It is not immediately known when the company will hit the market or how much they are going to raise in the first tranche, but typically a rating comes when an issuer is already in the market.
Tata Capital did not respond to an email from TNIE. “We equalized the ratings on the senior secured and senior unsecured notes under the MTN programme with our long-term issuer credit rating on the issuer. This is because the company is prudentially regulated,” S&P said in a note.
The senior unsecured notes will constitute direct, unconditional, and unsubordinated obligations of the issuer. They shall at all times rank equally with all other senior unsecured obligations of the finance company, the rating agency said.
Under the MTN programme, Tata Capital may also issue index-linked notes. Under our rating criteria, we do not rate the notes if principal payments are linked to fluctuations in equity or commodity prices, or equity or commodity indices, the agency added.
Earlier this year, the Reserve Bank had approved the merger of Tata Motors Finance with Tata Capital, forming the 12th largest NBFC in the country. Under the RBI regulations, Tata Capital has to go public by next September.
The move by Tata Group is in line with RBI’s mandatory requirement for “upper layer” NBFCs to list within three years of being notified, i.e September 2025. Tata Capital Financial Services, which merged with Tata Capital later in January 2024, is on the regulator’s list.
As of March 2024, Tata Capital had a wide funding base from multiple lenders, including non-convertible debentures (NCDs) at 39%, term loans at 42 percent and external commercial borrowings at 7 percent.
For the financial year 2024, Tata Capital had reported a net profit of Rs 2,492 crore on revenue of Rs 13,309 crore.