Icici To Redeem Scici Bonds

Close on the heels of Industrial Development Bank of India's premature redemption of deep discount bonds, term lending institution ICICI has decided to redeem Rs 605 crore worth of multi-option bonds issued by the erstwhile SCICI which it had taken over.

The institution is offering an option to the bondholders to switch over their existing holdings to fixed deposits bearing about 100 basis points higher interest rates than its existing fixed deposits.

ICICI will save around Rs 25 to Rs 30 crore per annum on the interest outgo due to the roll over.

SCICI had issued four kinds of unsecured redeemable bonds in July-August 1996 -- deep discount bonds, regular income bonds, pension bonds and money back bonds. The regular income bonds were for a period of nine years and the other bonds for a period of 27 years.

 

Both the bondholders and the company have the right to exercise call and put options during the tenure of the deep discount bonds. The first date of exercising the call/put options is March 1, 2001. ICICI has decided to exercise that option, a company official said.

ICICI is offering the bondholders an option to park the money thus redeemed in fixed deposits of one to five years. The interest rates offered to the bond holders will be in the range of 10.75 -11.5 per cent -- around 100 basis point higher than the current fixed deposits.

The FI offers around 9.75 to 10.6 per cent for its fixed deposits for a tenure of one to five years.

ICICI will be the second institution after IDBI which to redeem its high interest bonds. Unit Trust of India also prematurely terminated its Rajlakshmi scheme this year.

IDBI had redeemed Rs 2,200 crore worth of deep discount bonds in August this year. The institution had launched a special deposit scheme -- IDBI Suvidha -- to mop up part of the fund offering a special interest rate.