Tata Capital eyes first dollar bond amid India shadow bank rush

The offering comes amid a surge in offshore bond and loan sales after the Reserve Bank of India tightened rules in November 2023, making it harder for shadow lenders to tap funding from local banks

Tata Capital Ltd. is gearing up for its first dollar bond sale, according to people familiar with the matter, marking another addition to the wave of offshore debt sales by Indian shadow lenders over the past year.

The financial services unit of the Tata Group, the conglomerate spanning industries from coffee to cars, is planning to issue a benchmark-sized note with a 3.5-year maturity. The proceeds are expected to be used for lending and other purposes, the people said, asking not to be identified.

The offering comes amid a surge in offshore bond and loan sales after the Reserve Bank of India tightened rules in November 2023, making it harder for shadow lenders to tap funding from local banks. Shriram Finance Ltd. last month borrowed $1.28 billion in a multicurrency social loan, the biggest ever offshore facility by an Indian financier.

Investors have snapped up the supply, drawn by relatively attractive high yields and the opportunity to diversify their portfolios beyond high-yielding Chinese debt.

BNP Paribas SA, HSBC Holdings Plc, Mitsubishi UFJ Financial Group Inc., Standard Chartered Plc and JPMorgan Chase & Co. are managing Tata Capital’s bond sale, the people said. The issue is expected to be rated BBB- by S&P Global Ratings.