Engineering giant Larsen & Toubro (L&T) is entering the market on Tuesday to raise Rs 50 crore though a 10-year bond. The core size of the issue, which will be privately placed, is 25 crore. It will carry a 100 per cent greenshoe option.
The indicative coupon for the instrument, to be raised through a book-building process is 8.20-8.40 per cent. A 10-year government paper offers an annualised return of 7.32 per cent. Standard Chartered Bank is the arranger to the issue, which will close on August 29. The bonds are secured against the fixed assets of the company.
L&T bonds are rated AA+ by Crisil, indicating high safety. "The private sector companies do not enter the market with such a long dated paper too often. To created the right kind of appetite, L&T is positioning the instrument as a secured paper," said a treasury head.
In the public sector, Power Finance Corporation and Indian Railway Finance Corporation have raised long dated funds.
The company also placed Rs 15 crore through a 90 day commercial paper at 6.15 per cent. The paper is rated P1+ by Crisil, which indicates the highest safety.
Last week the company had placed Rs 10 crore through a 90 day commercial paper at 6.19 per cent. Indian Oil Corporation (IOC) has also placed Rs 100 crore through a 90 day CP at 6.15-6.20.
