Why JLR is taking loans worth £2B
What's the story
Jaguar Land Rover (JLR), the British luxury car division of Tata Motors, is raising £2 billion through a five-year loan from several multinational banks. The move comes as part of the company's strategy to refinance debt that is due early next year. The loan is likely to be priced at 155 basis points above the UK's Sterling Overnight Index Average (SONIA) rate and syndicated to a wider group of lenders later this month.
Strategic shift
Loan priced at around 5.28%
The SONIA rate currently stands at 3.73%, which would put the loan at around 5.28%. A person aware of the deal said to ET, "About seven banks are the main underwriters to this loan, which is the first by the company after a long time." Normally, JLR prefers bond markets overseas but this year due to international market volatilities, a bond issue seemed an expensive proposition.
Underwriters
Core underwriters to the loan
The core underwriters for this loan include DBS Bank, Citibank, Standard Chartered and Hong Kong and Shanghai Banking Corp, as well as Japan's Mitsubishi UFG Financial Group. These banks have already committed to the loan. However, a JLR spokesperson declined to comment on the matter.
Financial outlook
JLR's net profit plummets in FY26
In FY26, JLR's net profit plummeted to just £14 million from £2.5 billion a year ago. This was mainly due to US tariffs, declining demand in China, and a cyberattack that disrupted production for weeks. However, the automaker did manage a financial turnaround in the March quarter after posting losses in December quarter.
Debt distribution
Breakdown of JLR's debt outstanding at FY26-end
At the end of FY26, JLR had £5.4 billion of debt outstanding. This included £1.8 billion of unsecured bonds, £2.9 billion of unsecured loans, and £38 million of other debt. The company said in its annual report that "of the 5.4 billion of debt, £2.1 billion is denominated in Pounds Sterling, £0.7 billion in Euros, £1.6 billion in US Dollars and £0.3 billion in Chinese Renminbi."