Credit Analysis Research Ltd (CARE) has retained a Triple A rating for the enhanced amount. Earlier, the size of the omni bond issue was Rs 3,800 crore.
According to top officials, IDBI will privately place the bond issue which will have two options -- regular return and zero coupon.
The second series of the omni bond issue totaling Rs 260 crore was issued in 1995-96.
P S Subramanyam, chief general manager, IDBI, said "These bonds have been issued for tenures between seven years and 10 years and at an interest rate band of 15.5 per cent and 16 per cent." The advantage of the omni bond is that IDBI can place the bonds at any point during the year without going in for specific permissions.
The fact that IDBI has raised only Rs 600 crore so far through omni bonds but gone ahead with the enhancement of the issue is an indicator to the fact that it will go in for private placement in a big way.
kets are easy and even long dated government paper is being subscribed to by banks.
By this rationale, the omni bonds will do quite well as it offers a much higher yield and is as safe as gilts. That apart, there is a lot of demand from top rated debt from mutual funds and cash rich corporates. IDBI will be able to tap the mutual fund segment.
The enhancement of the bond issue size comes at a time when the development financial institution has planned to slash its market borrowing from Rs 8552.9 crore in 1995-96 to Rs 8,348 crore in 1996-97.
Though it has slashed the market borrowings, IDBI is planning to increase the quantum of disbursements by nearly 50 per cent. For instance, it aims at a rupee disbursement of Rs 9,800 crore in 1996-97 against Rs 6620.6 crore in 1995-96. The foreign currency disbursement is projected at Rs 2,200 crore up from Rs 1364.7 crore.
The financial institution has calculated the average interest on fresh rupee borrowing at 17 per cent and disbursement at 19 per cent keeping a two per cent interest spread. The marginal cost of rupee borrowing last year increased from 12.4 per cent in 1994-95 to 15.6 per cent in 1995-96.
The interest spread in regard to the foreign currency is pegged at one percentage higher than the rupee component. The institution has pegged the average interest on foreign currency borrowing at seven per cent and lendings at 10 per cent. The total borrowing in the year will be Rs 8,348 crore, down from Rs 8552.9 crore.
IDBI, which had already mopped up Rs 2,000 crore through its flexibond issue and private placements of bonds, plans to hit the capital market with another mega retail debt issue in September, according to P V Narashimhan, executive director, IDBI. The proposed Rs 1000 crore retail issue, which has been awaiting the Securities & Exchange Board of India clearance, has a 100 per cent greenshoe option.
