Srei International Finance Ltd is set to launch private placement of Rs 30 crore of fully foreign guaranteed local currency bond. The bond is guaranteed by Nederlandse Financierings -- Mastschappij voor Ontwikkelingslanden NV (FMO) -- a multilateral development finance institution owned by the Netherlands government. This will be the first fully foreign guaranteed local currency bond issued in the domestic market.
The face value of the bond is Rs 25 lakh with a tenure of 10 years. The bond will be redeemed in 16 equal semi-annual installments after 30 months from the issue. The company is likely to hit the market within 15 days. J M Morgan Stanley Pvt Ltd is the sole adviser and lead arranger of the issue, while UTI Bank is the trustee.
Coupon for the bond will be fixed via book-building route. Hemant Kanoria, managing director of Srei, said, "We have not identified the book-building range as yet, but it will be very close to the yield of government papers with similar maturity." The yield of the 10-year paper today closed at 9.55 per cent.
Kanoria said the guarantee given by FMO would help the company to raise money at a cheaper rate. "It is very difficult to raise a long term loan from the local market and most of the corporate bonds issued in recent times have maturity period less than or equal to seven years. However, we hope to be successful in raising the money at a cheap rate because of the guarantee."
Rating agency Crisil has assigned a AAA (so) rating to the paper based on the Standard & Poor's AAA rating to FMO. Kanoria said Srei might come out with few more issues of the similar kind, depending on the success of this issue.
Srei posted a 25.06 per cent growth in net profit at Rs 11.87 crore in 2000-01, compared with Rs 9.45 crore posted in the previous year.
