Ge Cap To Float Rs 60cr Bond At 17% Yield

GE Capital is all set to enter the debt market with a Rs 60-crore bond issue in the first week of March.

This foray by one of India's biggest non-banking finance companies is significant as it is for the first time that the US major is hitting the debt market after taking over SRF Finance, the financial services arm of Arun Bhagat Ram's DCM Group.

A source said that the company is planning to raise Rs 60 crore through the private placement route. "GE Caps has always entered the market through private placement and this time, too, it will be no different," the source added. Although final details are still being worked out, the source said that the interest rate band of the bond has been fixed between 16-16.5 per cent.

The issue may have two structures: One will have a two-year tenure with a "put" option after one year. The minimum subscription of the paper has been kept at Rs 25,000. The second structure was still being worked out.

The yield on paper works out to be 17 per cent which is one of the highest that will be offered by a AAA-rated paper. Crisil has rated the GE Capital debt issue with a AAA (so). The other AAA-rated papers like the Rs 200-crore Bharat Petroleum Corporation Ltd, are offering an annualised yield of 16.10 per cent, while Mahanagar Telephone Nigam Ltd (MTNL) is offering a coupon of 15 per cent. The Industrial Development Bank of India will also be offering a yield of 16.03 per cent for its paper.

Some marketmen expressed surprise at the GE Capital coupon. "When issues with much lesser coupon rates are sailing through in the current easy liquidity conditions, it is surprising that GE Capital has to offer a high rate," they said.