LONDON -- Jaguar Land Rover has shelved plans to issue a U.S dollar bond after investors demanded too high an interest rate to compensate for the risk the coronavirus poses to the automaker, according to people familiar with the matter.
Jaguar hired Bank of America Merrill Lynch to meet investors in the U.S. last week ahead of a potential sale of new bonds, and days after warning the deadly virus outbreak was impacting its supply chain.
The company gained enough interest to prepare an eight-year bond in the high 7 percent yield range, according to the people who asked not to be named because they are not authorized to speak publicly.
But news this week that the company could start to run out of Chinese parts for its UK factories in about two weeks, and that it may never recoup the sales lost to the virus, has ended its chances of issuing debt at acceptable levels.
Jaguar, a unit of India's Tata Motors, gets about 20 percent of its sales from China. The company's $500 million dollar bonds due 2027 fell 1.2 cents on Thursday.
A spokeswoman for Jaguar told Bloomberg News that no launch of a transaction was announced at the time of the discussions.
"The meetings with U.S. investors were planned as a non-deal roadshow," she said.
The company "routinely monitors the debt capital markets so could decide to issue a new bond anytime it thinks conditions are favorable," she said.
Officials at BAML declined to comment on the potential deal.
The company is scheduled to repay the equivalent of about $1.2 billion of maturing bonds over the next two years, including a $500 million note due in March 2020.
JLR is not facing any near-term pressures to raise new funding and has around $6 billion of liquidity to help tackle any near-term maturities.
Jaguar returned to the bond market for the first time in almost a year in November, selling 800 million euros ($864 million) of debt following a positive set of results. It took advantage of investor optimism around the company at the time and raised an additional 200 million euros just a month later.