First steps
Among the two first steps for issuing a debenture are obtaining a credit rating from a recognized agency, and lining up the legal foot soldiers
Credit rating
What certainly helped in the case of the Tata debenture was the stellar credit rating. In the case of a debenture, the credit rating provided is typically the reflection of the credit rating for the issuing company. Given the strength of the company’s balance sheet, the debenture was given ‘LAA+’ and ‘AA+’ ratings by ICRA Limited and Credit Analysis and Research Limited respectively. These excellent ratings signify that the Tata debentures are the lowest risk debt product currently available in the market.
Legal advisor
Another key actor in the preparation phase is the legal advisor, who assists with a multitude of tasks in the preparation of the key presentation document of the debenture – the prospectus. The ‘business card’ for Tata’s debenture is its 173-page prospectus, a document that answers most questions an investor might have. The legal advisor will also coordinate the necessary approvals from the financial authorities (including the relevant stock exchange), and the contractual agreements with the various actors in the debenture issue (see box and chart 1).
