L & T Places Cp At 6.25%, Nalco At 6.30%

Larsen & Toubro (L&T) today issued the cheapest ever 90-day commercial paper (CP) for Rs 10 crore at 6.25 per cent, 25 basis points lower than the bank rate. According to investment bankers, the issue, rated P1+ by Crisil, was placed with a foreign bank.

On the other hand, aluminium major Nalco placed a 3-month CP for Rs 100 crore at 6.30 per cent today.

This is the third instance where the Mumbai-based L&T raised money at below bank rate. On July 29, it raised Rs 15 crore at 6.36 percent and on July 23, it issued a Rs 10 crore CP at 6.48 per cent.

 

According to dealers, the deals struck by L&T reflects the surplus funds available in the market. A bond dealer said, "Liquidity remained good even after a Rs 7,000 crore auction on Friday. A bank will get a even lower return in the call market."

Dealers are expecting CP yields to fall further. A fixed-income head with a merchant bank said, "The Reserve Bank of India is pumping money into the system by continuously buying dollars. We do not foresee any change in the situation at least over the next one month. So we can see some more issues at below bank rate."

He, however, does not expect CP rates to go below 6 per cent. The Nalco paper was rated A1+ by Icra and got bids aggregating Rs 750 crore.