Steel Authority of India (SAIL) Ltd would be privately placing 7-year bonds worth Rs 500 crore through a book-building process, according to officials close to the issue.
The issue opens on 24 December, and contains a subscription amount of Rs 250 crore with a greenshoe option of Rs 250 crore.
Lead merchant banker to the issue would be SBI Capital Markets while co-arrangers include Darashaw Securities, R R Financial Consultants Ltd, Centrum Finance Ltd and JM Morgan Stanley Ltd.
The bonds have received a rating of `LAAA (structured obligation)' from the credit rating agency ICRA Ltd. According to officials, this top rating has been granted on the basis of the federal government guarantee which is for a 10-year period and includes the payment of interest and the repayment of principal of Rs 500 crore as well.
The 7 year bonds have been dividend into two structures. One of these would have a put and call option at the end of the fifth year and the book building range for these bonds would be 11.85-12%. The other structure would also be price through book building though in the range of 12-12.15%. This latter option would not contain any put or call option.
Closing date for the issue has been set at 10 January although it is likely to be subscribed to much earlier. Merchant bankers say there is a dearth of bond issues at present due to Y2K concerns but the SAIL issue would provide to good investment opportunity at this point of time.
Among similar state-owned organisation, the Industrial Development Bank of India last week raised 7-year-3-months money at 12.30 per cent annual interest and 5-year 3-month money at 12.10 per cent annual interest.
The Export-Import Bank of India, another top-rated state-owned institution, recently raised 5-year money at 11.90 per cent.
And amonth trop-rated corporates, the Housing Development Finance Corporation raised 8-year money, with a 7-year average maturity, at 12 per cent.
Indian financial services firm Citicorp Finance India Ltd is in the market with a one year bond issue to raise Rs 50 crore, including a greenshoe option of Rs 25 crore, money market brokers said on Thursday.
The issue, rated P1 + by Crisil, carries two options, brokers said. While interest will be paid at a flat rate of 11.15 per cent under the frist option, under the second option, the coupon of the first seven months will be deicded by book building in the 10.75-10.95 per cent band, they said.
The interest rate for the balance period under the second option will be reset monthly and there will also be a monthly put option for the same period, brokers said.
