Ge Caps Rs 100 Crore Floater Ncd Launched

GE Capital Services India has launched a floating rate Rs 100 crore non-convertible debenture (NCD), linked to Reuters one-year government security benchmark.

The maturity of the issue is seven years with a put and call option after four years. DSP Merril Lynch is the sole advisor and lead arranger of the issue. The paper is rated 'AAA' by Crisil and "Ind AAA" by Fitch.

The benchmark for the issue will be the average of the semi-annual yield of a one-year government security (as appearing on the Reuters page INMBK at 12 pm) for a period of 15 business days prior to the coupon reset date.

The coupon of the issue will be 190 basis point higher than the benchmark and will reset in every six months. The interest rate for the first six-month period has been computed as 8.11 per cent.

Pradeep Dokania, executive vice-president, DSP Merril Lynch said: "This product structure addresses the need of the hour for institutional investors who would like to ride on a floating rate but would not like to link it to short-term rates such as overnight call money rates, which tend to be volatile at times and would prefer to link it to a transparent longer term benchmark rate."

The corporate bond market has become very attractive to the investors of late as there is little scope of deploying the fund. Issuers have entered the market with record low coupons.

In the secondary market as well, the yields have dipped sharply and the spread between the corporate paper and government securities with similar maturity is narrowing sharply.