Just days after DPM Shanmugaratnam stressed in Mumbai on the importance of developing the Asian bonds market, the Tata Group has announced that it has raised S$886 million out of the S$1.1 billion in debt sold this year. Early this month, it has announced that it plans to raise some S$300 million for expansion plans. This month, TML Holdings, a Singapore incorporated company and unit of Tata Motors Ltd has issued five-year bonds at a coupon rate of 4.25% per annum and raised S$350 million.
According to Tata Motors, it has borrowed in Singapore dollars mainly because TML had to meet the working capital requirements as well as expenditure plans of the company. In addition, it had to redeem preference shares that were issued to finance part of the Jaguar Land Rover acquisition. The Group hopes that Jaguar sales will offset the losses resulting from the weak demand for Nano and Manza cars in India.
According to the analysis by The Times of India (please see video below), Tata chose Singapore due to the vibrancy of its bond market, robust liquidity and attractiveness to a diverse pool of investors.
Analysis by Business Times shows that government incentives coupled with the proximity to India and China have helped Singapore maintain its AAA-ratings and become a regional wealth management hub.
As discussed in our blog earlier this month, Singapore is seen as a trustworthy wealth management center to non-resident Indians. In addition, it has become the fourth largest offshore financial and currency trading centers in the world. Data from the Boston Consulting Group shows that in 2010, Singapore had US$512 billion of private-banking assets, making it the largest pool in the region then.
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