Jaguar Land Rover Plc: Bond Valuation

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Jaguar Land Rover Plc: Bond Valuation

Case

Reference no. W28507

Spanish language

Subject category: Finance, Accounting and Control

Authors: S Veena Iyer (Management Development Institute (MDI), Gurgaon)

Published by: Ivey Publishing

Originally published in: 2022

Version: 2022-04-25

Length: 7 pages

Data source: Published sources

Topics: Refinancing; Cost of capital; Finance

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Abstract

This is a Spanish version. Jaguar Land Rover Automotive Plc, a wholly owned subsidiary of the Indian company Tata Motors Limited, announced bond issue worth USD500 million. The proceeds of this issue were to be used to refinance costlier outstanding bonds. The company was able to raise new debt at substantially lower interest rates than its outstanding debt as a result of its sustained good performance, which led to strong company fundamentals and improved credit ratings. Students will analyze the various motivations for such a financial strategy, whether it will lead to cost savings or cash flow savings and, if so, the extent of the savings.