Bloomberg reported that TATA Steel Limited is tapping into the lowest foreign loan rates in six years to cut the cost of debt that funded its 2007 takeover of the UK's Corus Group.

People familiar with the matter said that India's biggest steelmaker is in discussions with banks to raise USD 3 billion to refinance borrowings that were used in the USD 12.9 billion acquisition.

Margins on local companies' non rupee loans averaged 171 basis points this half, the lowest since 2008 compared with 197 in the 6 months ended December 31st.

According to Aquarius Investment Advisors Pte, TATA Steel has returned to profit on reviving demand in Europe, after a record loss in the Q1 of 2013, and a new Indian government is boosting optimism that its domestic market will recover. Monetary easing by global central banks from the Federal Reserve to the European Central Bank has buoyed investor appetite for emerging market debt.

Mr A S Thiyaga Rajan SMD at Aquarius in Singapore said that "There's definitely a new found optimism across the globe. TATA Steel's earlier debt is more expensive and its replacement will help straighten the company's bottom line."

Indian companies raised USD 14.7 billion in foreign currency loans in the first half, the most in such a period since 2011, as borrowing costs abroad fell even as those at home remained at the region's highest levels.

Reserve Bank of India governor Raghuram Rajan has held the repurchase rate at 8% after raising it by 75 basis points, or 0.75 percentage point, from September through January to temper inflation. Policy rates are near zero in the U.S., Europe and Japan.

According to a JPMorgan Chase & Company index, the yield on 5 year AAA corporate notes in India rose 47 basis points since mid 2013 to 9.16%, while that on 10 year government debt jumped 126 basis points to 8.7%, data compiled by Bloomberg show. The average rate on Indian companies dollar bonds dropped 99 basis points to 4.6%.