Tata Perpetual Bond, a fixed income opportunity?

Economics 01 March 2021 1:08:PM


The private placement of Tata Motors comes with a coupon of 9.55 percent.

The private placement of a perpetual bond by Tata Motors Finance Limited is up for a bid. It is a permanent and subordinate bond for types of instruments. Listed on the Wholesale Debt Market ('WDM') of the National Stock Exchange of India Limited ('NSE') segment. If we speak about the essence of the instrument, it is unsecured but useful. This is also a daily source of income received on an annual basis, and investors should expect it to continue for a long time if the issuer is financially balanced. And this is an advantage of a permanent bond investment. The issue size has Increased to 200 Cr. The trade and issuance mode is only available via Demat (Private only).

Issuer: Tata Motors Finance Limited (Perpetual) Tranche 5
Rating:  A by ICRA
Type/Structure:  Perpetual, Subordinated, Listed, Unsecured, Rated Non-Convertible Debentures which shall be taken into account for the calculation of Tier I and/or Tier II Capital
Issue Size: 200 cr  i.e (25 Cr base issue + 175 Cr. Green Shoe)
Face Value: 10.00 Lacs
Coupon: 9.55%
Call Option: The Issuer may exercise Call Option on the date falling at the expiry of 10 years from the Deemed Date of Allotment and the last date of every month thereafter (each at a Call Option date)
Step Up: 100 bps after 10 Years (if the call option is not exercised)
Coupon Payment Dates: 2 March/Annually
Bidding: 1st March 2021
Allotment Date: 2nd March 2021
Deal Value Date: 4th March 2021


Kindly inform your bids latest by 28th Feb 2021.
offer at PAR + 2 Days accrued interest Rs. 524.29

About the Issuer of perpetual bonds:

Tata Motors Finance Limited (TMFL) is the leading and most preferred financial institution engaged in financing the entire range of Tata Motors Commercial and Passenger vehicles. It is a non-deposit-taking systemically important (ND-SI) NBFC. 
TMFL is one of the pioneers of vehicle financing established way back in 1957
The company has a strong footprint across India and operates through its own 260+ branch networks, in addition to Tata Motors dealers’ sales outlets

The company’s passenger vehicle business outperformed their expectations in the first half of fiscal 2021 with volumes increasing 10 percent year-on-year and business breaking even at the EBITDA level.

In this lower interest rate regime, there is a chance for an Investor to Invest in the Perpetual Bonds of the well-known entity Tata Motors Finance at a Yield of 9.75%

Take a look at the previous offerings of tata perpetual bonds:- 

Perpetual bonds do not have a specified date of maturity. The issuers can buy back the bonds after a certain period, and it is generally five years or 10 years. Like other bonds, these bonds are also listed on the stock exchanges and provide exit opportunities to the Investors. Nowadays, Perpetual Bonds are making some noise in the market for all the right reasons. Investors are now pulling out their investments made in bank fixed deposits (FDs) and putting them into perpetual bonds. Also, the rate cuts made by the Reserve Bank of India (RBI) since 2019 and aggravating COVID-19 impact has made FDs lose their shine. Tata Motors Finance Limited has issued recently the three tranches of the Perpetual Bonds starting with 10.25% in September to 9.75% in the last issue and currently up for a deal at a rate of 9.55% and in all the tranches the issuer has raised the amount successfully one because of the Brand Name and second the terms of the issue. The issuer also promises to pay additional 100 bps to the base coupon if the call date is not exercised means the coupon will be revised to 10.55% from 9.55% at the end of the 10 years from the allotment date.

Don't forget to inform us about Kindly inform your bids latest by 28th Feb 2021. offer at PAR + 2 Days accrued interest Rs. 524.29

NOTE:- Subscription opportunity for this tranche is no longer available. because the issue is subscribed.

Sign up and open a free Demat account With GEPL Capital in a few minutes, and take the first step towards a successful investment.

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