Issuer:  Tata Motors Limited
Issue:  Fixed Rate Senior Unsecured Notes
Issuer rating: Ba2 (Stable) by Moody’s, BB (Positive) by S&P
Exp. Issue rating: Ba2 by Moody’s, BB by S&P
Format: Regulation S only
Tenor: 5.5 years
Currency: USD
Issue Size: Benchmark
Initial Price Guidance:  5.00% area
Clearing: Euroclear and Clearstream
Denoms: USD200k x 1k
Governing Law: English Law
Listing: Singapore Stock Exchange
UOP: Notes will be used for refinancing the existing external commercial borrowing of the Company, new additional capital expenditure and other permitted purposes as per RBI ECB guidelines

I thought it would be interesting to highlight this issue coming out today amongst the bevy of new issues crowding up the In Box, like the US1.5 bio Citigroup 5.8% Perp that came out yesterday and the  Citic USD 5Y, Dai-ichi Life Perp etc.

Tata Motors did their first SGD issue last May for SGD 350 mio, paying a coupon of 4.25% for 5 years and that poor bond never saw much daylight after.

tata motors sgd priceTata Motors 4.25% SGD 05/2018 historical bond price (indicative)

It is now trading at 99.25/99.875 (indicative) 4.48/4.29%, representing a credit premium of about 3.2% over the swap rates.

For the lack of name familiarity, the Tata Motors USD 4.125% 12/2018 issue is only yielding approximately 3.6% (credit premium approx 2.45%) for a paper that has 7 months longer to run than the SGD issue.

The new USD Tata 5.5 year (maturing in 04/2020) at 5%, should give a premium of 3.3%  over swap rates.

That is pretty unappealing compared to the SGD paper which is about 2 years shorter.

On the other hand, weaker credit, Tata Steel a.k.a ABJA Investment, 4.95% 05/2023 SGD paper is indicating about 5.5% yield, its bond price at about 96.25, after dipping to a low of 81 cts last year.

I find it pretty amusing that the market somehow has appetite for the  recently issued Tuan Sing’s and Chip Eng Seng’s, unrated papers, whilst ignoring the rated, but admittedly junk, names like Tata Motors and other decent subordinated issues like Unicredit SGD 5.5% callable 07/2018 which is trading at 96.75 (6.48% – higher than Swiber !!!) when their similar USD Unicredit 6.375% USD sub callable in 05/2018 is yielding only 4.7%. Unicredit sub is rated Ba2/BB+.

Perhaps Singaporean bankers really do work for the PB rebate only ?