Mkvdc Plans Private Placement Of Rs 650 Crore Bonds

The cash-strapped Maharashtra Krishna Valley Development Corporation (MKVDC) has drawn up plans to come out with a private placement of bonds.

The corporation, which managed to close its previous issue of Rs 400 crore last month after keeping it open for nearly six months, has now set its sights on raising a total of Rs 650 crore (core issue size of Rs 400 crore plus a greenshoe option of Rs 250 crore).

The issue was scheduled to open on June 10 but has got delayed as the state government's guarantee is not in place and credit rating agency CARE has not yet assigned a rating as it is reviewing the Maharashtra Budget.

The government guarantee may get delayed as the Democratic Front government in Maharashtra is currently fighting a survival battle as 22 MLAs have withdrawn their support to it, sources said.

A senior state government official said that the corporation was planning a Rs 650 crore issue 'for financing various irrigation projects currently being undertaken by it'.

The Mahanagar Telephone Nigam Ltd had bailed out MKVDC's previous issue by making a single application for Rs 250 crore.

The proposed 10-year bond issue, like the previous one, is expected to carry a coupon of 11.50 per cent per annum. It will not have any call/put option for the investors.

To date nationalised banks and co-operative banks have invested around Rs 1,700 crore in the various bond issues of MKVDC. Since its inception in 1996, the corporation has raised around Rs 5,500 crore.

In the secondary market for non-statutory liquidity ratio (non-SLR) papers, the yield quoted on the MKVDC paper is around 13.50 per cent. The corporation had run into rough weather a couple of months back as it defaulted on interest payment to the tune of Rs 74 crore to institutional investors.