Ge Cap Issues Mibor-Linked Debentures

G E Capital Services India has issued one-year floating rate non-convertible debentures linked to the National Stock Exchange (NSE) overnight interbank rates. This is the first issue of bonds linked to the NSE overnight indices and also the first of its kind to be listed on the NSE.

The issue is for Rs 25 crore with a greenshoe option for Rs 25 crore. The bonds are being priced at 215 basis points over the average of the NSE Mibor (Mumbai interbank offer rate) and Mibid (Mumbai interbank bid rate), said Vishnu Deuskar, managing director of ABN Securities.

ABN Amro Bank is the arranger to the issue. "The bonds are unique as they are going to be listed on the NSE. Besides, by linking also coupon to the Mibid rate, this rate has been activated," said Deuskar.

The bonds have a one year tenor, with a one month put and call option. There is no floor or a cap on the interest rates. The bonds have been privately placed mainly with banks, he said. The NSE Mibid was 7.97 per cent and Mibor, 8.06 per cent, respectively, as of yesterday. The interest rate to the investor hence works out to around 10.15 per cent as on that date.

This compares to 13 per cent on a fixed rate instrument of similar maturity for a AAA-rated corporate in the private placement market. The concept of floaters is catching up with more corporates issuing overnight rate-linked bonds. Recently, Infrastructure Leasing and Financial Services Ltd (IL&FS) had issued bonds on similar terms, priced 225 basis points over the Reuters Mibor.