Icici Proffers 13.5 Per Cent For 5-Year Money
Industrial Credit and Investment Corporation of India Ltd (ICICI) has entered the private placement market for raising five-year money at 13.5 per cent, a rate offered by them before the Monetary & Credit Policy for the first half of the current fiscal was announced.
The market is stumped by the fact that ICICI is mopping up funds at a higher rate even after the reduction in Bank Rate by 100 basis points to 9 per cent.
The institution will offer 13.75 per cent for seven years and 13.50 per cent for five years. ICICI has decided against raising three year resources at this point of time.
ICICI had offered the same rate for its first privately placed issue (series C/98) in the current fiscal which closed for subscription on April 27, the day its retail issue opened for subscription.
Merchant bankers associated with the issue said that the institution has decided to offer the same rate because the monetary policy did not announce any cut in the cash reserve ratio and thus the market did not perceive a need to reduce the rates.
However, the Reserve Bank of India governor, citing the existence of ample funds in the banking system had indicated that the central bank would cut the cash reserve ratio if there was a liquidity crunch. Banks have taken the cue and reduced their lending rates.
ICICI's latest offering, series D/98, opened for subscription on May 4 and is expected to remain open till May 25, 1998. The issue is aimed at raising Rs 500 crore.
Meanwhile the retail bond issue of ICICI, which is aimed at raising Rs 300 crore with a 100 per cent greenshoe, is said to have received a lukewarm response. The retail issue is also offering the coupon of 13.5 per cent for five years.
For the current fiscal, the institution is planning to raise Rs 18,000 crore of which Rs 15,000 crore will be raised from the domestic market while the remaining will be raised from the international market. The last private placement of ICICI -- series C/ 98 to received a lukewarm response and succeeded in raising a sum of only Rs 200 crore from the market.