Tata Motors Ltd., India's biggest truckmaker, plans to borrow $3 billion from nine banks to finance the purchase of Ford Motor Co.'s Jaguar and Land Rover luxury-car brands, according to three people with direct knowledge of the deal.
The company plans to raise the money from banks including Citigroup Inc. and JPMorgan Chase & Co., said the people, who declined to be identified because the information isn't public.
Taking out a bank loan as opposed to selling bonds is cheaper for Tata Motors after the credit default swaps linked to its debt rose to a record on concerns of a ratings downgrade. Shares of India's largest truckmaker have declined 11 percent after Ford announced Tata Motors as the preferred bidder Jan. 3.
``It may be too big a deal for Tata Motors to swallow,'' said Mumbai-based Arvind Jain, an analyst at Religare Securities Ltd. ``Tata won't be able to get outsourcing from India and is unlikely to be able to introduce Jaguar or Land Rover to the Indian market at least in the next two to three years.