MUMBAI: Tata Motors, the flagship of the largest conglomerate in India Tata Group, has withdrawn plans to launch a Rs 1 billion non-convertible bond (ENT) offering, citing “higher cost expectations from participants due to tight money market conditions.”
The decision comes two days after the company approved the issuance of unsecured and exchangeable ENTs worth Rs 1 billion in three tranches. Tata Motors is the first major company to scrap its ENT offering after the national close caused by the coronavirus pandemic, underscoring tight liquidity conditions in the bond market. Mutual funds, insurance companies, and bank treasuries are for the most part ENT’s largest subscribers.
However, Tata Motors added that the company continues to have sufficient liquidity and that it “would consider issuing ENT at the appropriate time and under standardized market conditions.” Thanks to the blockade, the automaker for the first time in its 75-year history sold zero vehicles in April.
In the recent past, several companies have announced plans to launch ENT offerings to create a cash buffer to overcome the current difficult situation. The sister companies of Tata Motors, Tata Steel and Tata Power (through affiliate Coastal Gujarat Power) said they plan to raise funds through NCDs.
In the past two months, investors have switched to low-risk assets. As a result, although the demand for central and state government bonds has increased, reducing the yields on these debt instruments, there are not many interested in corporate debt instruments, which increases the yields on these papers.
Glaxo sells 5.7% in HUL for Rs 25,500 crore
World health specialist GlaxoSmithKline (GSK) said Thursday that it sold its 5.7% stake in the leading FMCG Hindustan Unilever (HUL) for nearly Rs 25.5 billion. The deal, the largest such transaction on the Indian stock market, took place at an average price of Rs 1,905 per share, data from the exchange’s block deal showed. GSK, which owned about Rs 13.4 million of HUL shares through its subsidiaries GlaxoSmithKline and Horlicks, sold the stake through various block deals on the NSE.