Reliance Telecom Bond Issue Opens Today

Reliance Telecom Ltd (RTL) is set to become the first infrastructure project to issue tax-free infrastructure bonds with a maturity of 5-7 years, bearing a coupon of 9.75 per cent to 10.50 per cent.

The issue opens today and will close on November 29. The bonds will be listed on the NSE.

RTL is planning to raise Rs 100 crore through the bonds, which are guaranteed by ICICI Ltd. The instrument is expected to be rated AAA(SO) by Crisil.

The company is planning to raise Rs 100 crore by issuing three instruments. The five-year bonds carry a coupon of 9.75 per cent, the six-year bonds at 10.25 per cent and the seven-year bonds at 10.50 per cent.

Given the bond is guaranteed by ICICI, the risk is minimal and it should be placed despite it being for a greenfield project. The pricing also appears attractive.

Reliance Telecom is raising resources for its basic and cellular services. It has already bagged the 15-year licence for basic services in Gujarat. RTLs licence fee was at Rs 239 per person compared with an average of Rs 522 per person by other companies.