Tata Capital allots ₹2,950 crore NCDs at 7.42% coupon
What's the deal? Tata Capital Limited has allotted ₹2,950 crore ($350M) worth of secured redeemable non-convertible debentures (NCDs) on a private placement basis. The company issued 295,000 NCDs on May 21, 2026, carrying an initial coupon rate of 7.42% per annum.
The floating coupon is calculated as the 3-month Treasury Bill rate of 5.32% plus a fixed spread of 210 basis points. It will reset quarterly until maturity on February 21, 2029 — a tenor of 1,007 days.
Each NCD has a face value of ₹100,000, with interest payments scheduled for May 2027, May 2028, and February 2029. Principal redemption falls on the final date. The NCDs are proposed to be listed on the National Stock Exchange of India.
Why now? India's debt capital markets have seen a steady stream of issuances from large non-banking financial companies looking to lock in favourable borrowing costs. With the 3-month T-Bill rate at 5.32%, Tata Capital is tapping the market at a spread that reflects its strong credit standing while offering investors a competitive floating-rate instrument.
What could go wrong? The floating-rate structure means coupon payments will fluctuate with the benchmark T-Bill rate. If rates fall, investors receive lower returns. Conversely, if rates rise sharply, Tata Capital's borrowing costs increase.
The NCDs are secured by a pari-passu charge on the company's receivables, book debts, and investments — but the security cover is set at just 1.00 times the outstanding debenture value, leaving no cushion above par.
The signal: Both CRISIL and ICRA have assigned their highest rating — AAA/Stable — to the issue, underscoring confidence in Tata Capital's creditworthiness. The strong rating allowed it to price debt at a relatively tight 210-basis-point spread over government securities.
Large, well-rated NBFCs continue to favour private placement NCDs as an efficient funding channel. The size of this single issuance — nearly $350M equivalent — signals robust institutional appetite for high-grade Indian corporate debt, even as global markets navigate uncertainty around interest rate trajectories.
