Question

What factors might have enabled JLR (Jaguar Land Rover) to raise new debt at less than half the coupon rate of interest in 2015, compared with the debt raise in 2011?

Answer 1

The factors are stated below :

i) JLR had hired Moody's which had upgraded the bonds issue from Ba3 to Ba2 to give it a stable look .

ii) JLR tried to mitigate the currency risk by issuing the debt in two different currencies ( dollar & pound)

iii) they changed the face value this time which was $ 500 mn this time , which means when matured the the amount will be 500 mn , the present value will be $ 336 million , which is lower than the amount to be paid for the previous issuance ( i.e $ 410 million )