ICICI Bank has given a loan of Rs 2,675 crore to Tata Steel for a period of three years. This loan is intended to help Tata Steel repay its existing debts, according to sources familiar with the matter.
Tata Steel has raised Rs 2,700 crore through fixed-rate bonds without any collateral, at an interest rate of 7.79%. Documents filed with the National Securities Depository Ltd show this.
As per the documents, Tata Steel will make a single payment to the investors on March 27, 2027.
Both ICICI Bank and Tata Steel have not responded to ET’s request for comments.
Bond traders have noted that these bonds are priced well, at 72 basis points over three-year government securities. Last week, three-year government securities were trading at 7.07%.
A report by CareEdge Ratings in July 2023 mentioned that Tata Steel has already refinanced 60% of its debt obligations for FY24. It is expected to complete the remaining 40% by the first half of FY24. The company aims to repay $1 billion in debt according to the management.
Tata Steel is one of the top three steel producers in India, with a standalone capacity of 21.6 million tonnes per annum of crude steel. It plans to increase its total capacity to 40 million tonnes per annum by FY30. India Ratings released a report in February stating that most of this capacity expansion will be done through brownfield projects.
India Ratings expects Tata Steel’s financial health to improve due to the restructuring of its UK operations, which have been causing financial strain. The UK government has agreed to fund a significant portion of Tata Steel’s planned capital expenditure.
The agency also anticipates a reduction in fixed costs and overheads from FY26 onwards, leading to positive cash flow in Tata Steel’s UK business.”
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