Omnibond I Coupon Cut By 25 Bps

The Industrial Development Bank of India has cut the coupon rate by 25 basis points for its on tap issue Omnibond Series I, in a scenario of rising interest rates.

IDBI which itself offered interest rates in the higher end of the band of its book building issue that closed three days back reduced rates to discourage fund mobilisation.

For instance, for an investment of Rs 2 crore having a maturity of one year, IDBI offers 10.75 per cent as against 11 per cent offered earlier, two years is 11 per cent as against 11.25 per cent and three years is 11.25 per cent against 11.50 per cent offered earlier.

 

However, these are indicative rates and are tailor made as per the understanding between the investor and the FI. These rates are totally market driven. said sources.

Before deciding the interest rate, one has to tally the cost of funds with the market driven rates, added sources.

At present, IDBI does not need funds as they have recently raised required money from the debt market. And they have a surplus of money they are discouraging the investors by reducing the coupon rates, added sources.

IDBI has raised Rs 750 crore through book building exercise by issuing Omnibond Series VIII which closed for subscription last Friday. The series VIII issue announced the cut off at the higher side of the indicative band while the on tap issue has reduced the rates by quarter per cent across the board has taken the debt market by surprise.

IFCI on the other hand has increase the coupon of its Series XVI by 150 basis points within five days for its bonds having one year maturity from 10 per cent to 11.50 per cent.

The on tap issue of IDBI offers rates for investments of not less than Rs 10 lakh and its multiple having a maturity from one year to seven years. In this series, the major share of subscription is for the paper with short tenure ranging from one year to three years.

Meanwhile, IDBI is contemplating to hit the debt market with its Omnibond Series IX issue sometime after the credit policy for the second half of the current financial year is announced.