Idbi Bonds Float In Sept

Industrial Development Bank of India will enter the retail bond market in mid-September to raise Rs 750 crore with a 100 per cent greenshoe option and has decided to offer an annualised interest rate in the range of 13.5 - 14 per cent.

This would be the first tranche of Rs 5,000 crore Umbrella Bond issue. Sources said that the financial institution plans to raise the amount in three tranches of Rs 1,500 crore, Rs 1,000 crore and Rs 2000 crore, respectively.

Meanwhile, the last series of IDBI's private placement-"Omnibond 98/D" has succeed in raising Rs 2000 crore, said sources.

IDBI would be offering four instruments which includes regular income, growing income, deep discount and education bond.

The minimum investment amount is fixed at Rs 10,000 and there after the investment can be done in multiples of Rs 5000.

The financial institution is also planning to rope in IDBI Capital Market Services and Securities Trading Corporation of India for market-making of the bonds.

The education bond is aimed at those parents who save to huge amount of money for educating their child/children.

This instrument will give investor a choice of put option at the end of five, seven and ten years and thus withdraw the amount in lumpsum. Alternatively, the investor can opt for annuity payment whereby at the end of five years investors can receive the amount in five installments.

While the regular income bond will have maturity of five years with investors given a choice to receive interest either quarterly annually, or on semi annual basis.

The deep discount bond will have a long term maturity and is likely to offer three options which includes return of Rs 25,000 Rs 50,000 and Rs 1 lakh on the invested sum of Rs 10,000, said sources.

The growing income bond is a step up bond having a maturity of seven years and a put option at the end of every year.

Sources said that the financial institution is expected to finalise the coupon on the bond issue during the end of August.