Friday, March 7, 2008

Tata Motors CDS Inching Up on Risk Worries

Credit-default swaps (CDS) on the Mumbai-based company rose 10 basis points to a record 503 basis points at 3:48 pm in Hong Kong, according to ABN Amro Holding prices. That means it costs $503,000 annually to protect $10 million of Tata Motors’ debt from default for five years.
Tata Motors’ five-year credit-default swaps have more than doubled and its share price fallen 12 per cent since Ford announced the automaker as the preferred bidder for Jaguar and Land Rover on January 3.

Tata Motors plans to raise the 15-month loan from nine banks led by Citigroup and JPMorgan Chase & Co, three people with direct knowledge of the deal said

It will pay less than 2 percentage points more than the London interbank offered rate (Libor) as interest and fees for the loan, the people said. About $2.5 billion will fund the cost of the acquisition and the rest will be used for working capital, the people said. Tata Motors is also talking to Bank of Tokyo Mitsubishi UFJ, BNP Paribas, Calyon, ING Groep, Mizuho Financial Group, Standard Chartered and State Bank of India to arrange the loan, according to the people who declined to be identified because the information was not public.

For more read the article on Business Standard / Bloomberg dated 07.03.2008

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