One-Year Idbi Paper At 16%

Earlier,ICICI was offering 16 per cent on a 15-month paper. The coupon rate that IDBI is offering is significant as the highest that any bank is paying on one-year maturity is 11 per cent.

While Deutsche Bank and Global Trust Bank are paying 15 per cent for deposits maturing in 15 months, public sector banks are offering just 13 per cent.

The Omni bonds are rated `AAA' and among non-banking finance companies only Apple Industries, which has an `AAA' rating, is offeringa higher rate than IDBI. Last month, IDBI decided to increase the size of the Omni offering to Rs 5,000 crore. The Omni bond issue (series V) was floated in the debt market .... on Monday. IDBI expects this series to raise Rs 300 crore .

IDBI is also offering a three-year paper at an yield of 16.50 per cent. There is an upfront discount of 1 per cent on this paper.

In Omni series IV, IDBI was forced to hike the upfront discount to 3 per cent from 1 per cent as buyers were shying away from parking their funds in a low-interest paper.

In the Omni bonds (series IV), the FI was offering 16 per cent on a seven-year paper. This time round, it is offering the same coupon for a one-year paper. "This indicates that the FI is interested in raising resources for the short term as it feels that after one year interest rates will come down," a merchant banker said. IDBI sources said the rate was market-related.