Tata Steel Ltd is expected to mandate a project financing (PF) loan of up to Rs 22,000 crore ($3.9 billion) to fund its 6-mtpa (million tonnes per annum) greenfield steel plant at Kalinganagar, Orissa. The loan is likely to be India's largest for the current fiscal year 2012-13.
Bankers aware of the pitching process said the company had met individually with key lenders and was seeking commitments of at least Rs 50-60 billion apiece.
"The deal is likely to be mandated to a few banks, which will later sell down commitments," said a Mumbai-based lender.
The loan will have a tenor of 10-11 years and is likely to pay 11.25% or less. Total project cost is estimated at R30,000 crore. The loan will be benchmarked against an existing facility in the market from Hindalco Industries Ltd, part of the Aditya Birla Group. Hindalco is to close a R90 billion 8-year loan at 11.3% next month.
Bankers reckon that Tata Steel's jumbo borrowing will be able to price close to Hindalco's level, despite the size.