Leela Venture To Float Rs 50cr Debt At 15.25%

Hotel Leela Venture is entering the market with a debt issue of Rs 50 crore at 15.25 per cent and plans to raise the funds through a floating rate and a fixed rate instrument.

The issue, rated LAA plus by Icra, has a tenure of seven years, and offers staggered redemption at the end of five, six and seven years. This is the first issue by a hotel major in the recent past. Of late a lot of corporates have been raising fund in the debt market.

The issue offers an option of floating rate which is pegged at 1.25 per cent over State Bank of India's (SBI) prime lending rate. The SBI prime lending rate at the moment is 14 per cent. The issue opens on Wednesday.

 

The offer is coming out at a time when the market is debating the existing benchmark of 14.5 per cent for triple A companies. There has been intense speculation among merchant bankers that the benchmark figure may go up by 0.25 per cent to 0.50 per cent. There were also reports that some leading corporates were considering postponing their issues due to this uncertainty.

Meanwhile, public sector Indian Petrochemicals has opened for subscription yesterday.

The issue of Rs 300 crore with another Rs 100 crore as greenshoe option carries a coupon of 14-14.25 per cent. Rated triple A by Care, it has a seven year tenure and five year put and call option.

Earlier, there were reports that the public enterprise was restructuring its issue to tide over an adverse market.

However, merchant bankers pointed out that "the rethink is due to the fact that being a public sector firm it was sure of subscription from trusts, public provident funds and other institutions."

The lead managers have opted for the book-building route. The cut-off coupon rate will be fixed later depending on the level of commitment from the subscribers.

Leela venture offering 15.25 per cent with a double A rating is seen to be right on the yield curve.

RIL which was a triple A company offer a coupon of 14.5 per cent and IPCL which is Triple A PSU is offering 14.25 per cent.

nt. With the market expecting the interest rates to move, the floating rate instrument of Leela Venture will evoke a good response, merchant bankers said.