The Indian Oil Corporation has decided to extend the closing date of its maiden Rs 300 crore bond issue to February 6.
The issue was supposed to close yesterday and had to be extended because of poor response, said an Indian Oil official.
He said that the pricing of the bond would be revised upwards depending on market conditions and the advice of the merchant bankers.
Many companies which had been planning to tap the private placement market have put their plans on back burner following Reserve Bank of Indias policy to hike domestic interest rates to fight the depreciation of the Rupee.
The RBI had hiked bank rate by 200 basis points to 11 per cent, the cash reserve ratio by 50 basis points to 10.5 per cent and slashed the refinance facilities to banks and primary dealers.
Subsequent to this banks have hiked their deposit rates and their lending rates by 100 - 200 basis points.
The IOC bond issue has thus become the first ongoing bond issue to be affected by the RBI move.
Indian Oil is aiming to raise Rs 300 crore by book building route offering an indicative rate of 11.75 per cent to 12 per cent. The five year bond has a put and call option after three years and has been rated AAA by ICRA.
Among those slated to hit the market includes Industrial Development Bank of Indias Rs 1,500 crore Flexibond issue scheduled to open on 23 January.
The pricing was finalised before the hike in Bank Rate and cash reserve ratio and there is considerable speculation on whether they would increase the rate. Subsequent to RBIs move, Industrial Development Bank of India had decided to go ahead with its retail bond issue on the advise of the lead managers.
