Tata Steel to Raise ₹3,000 Crore By Way of Bonds After 1-Year Hiatus: Shares Jump 3%

On 14 February, sources close to the company told news agencies that Tata Steel planned to return to the corporate bond market for the first time in almost a year raising ₹3,000 crore ($345.6 million). The fundraising is expected to be finished before the month’s end.

The steel major is in talks with merchant bankers and potential investors, the sources said. The company is currently gauging various bond tenors such as three-year, five-year, seven-year or even 10-year maturities and will finalize the terms by the market response.

On Thursday, Tata Steel’s shares responded positively to news of Stork’s acquisition, rising 3.02% to ₹136.28.

The company’s re-emergence into the bond market comes on the back of a recent upgrade in credit rating by India Ratings, which raised Tata Steel’s bars to AAA from AA+, the highest rating. The agency cited Tata Steel’s “integral linkages” with its parent, Tata Sons Private Limited, and strengthening financial position. Moreover, the rating is underpinned by expectations for lower losses at Tata Steel’s UK businesses in the next two years and a gradual return to profits.

Tata Steel has bonds with outstanding amounts of more than ₹12,800 crore, with ₹670 crore needing repayment in the next month. The company had last tapped the bond market in March 2024, issuing ₹2,700 crore in three-year bonds at a 7.79% coupon.

Although Tata Steel has yet to comment on the recent bond issue it is largely viewed in the market as a strategic play for enhancing financial flexibility and effective debt management.

This recent move comes in the context of an ever-changing economic landscape in which corporate bond issuances have surged as companies look to raise capital at attractive rates.