The Omnibond Series VIII of Industrial Development Bank of India (IDBI) has received subscription worth Rs 750 crore while the on-tap bond offer of Industrial Credit and Investment Corporation of India (ICICI) has managed to raise Rs 200 crore from the private placement market.
The Omnibond series of IDBI, which closed for subscription yesterday will announce the cut off rates for the bond issue today, while the ICICI offer issue is expected to remain open for few days.
"The cut off rates for the IDBI Series VIII is expected to be at the higher side of the band," said a merchant banker. "The immense competition in the debt market with all the three leading financial institutions being present in the market at the same time will force IDBI to announce high coupon. Besides, most of the bids received by the FI is at the higher side of the band," he added.
The issue, which opened on September 4, has raised money by way of book building, although the FI has not mentioned any fixed amount they wished to raise. A hefty subscription is reportedly in the five year and the seven year paper, said sources.
IDBI offered a three year floating rate bond linked to the bank rate, whereby the indicative coupon was 150 to 175 basis point over the bank rate(10 per cent). The five year paper offered an indicative band of 12 to 12.50 per cent and the seven year paper offered an indicative band of 12.50 to 13 per cent.
Against this, ICICI is offering fixed coupon rate of 11.75 per cent for three years, 12.50 per cent for five years, 13 per cent for seven years and 13.50 per cent for 10 years.
"Despite the fact that ICICI offer is more attractive than IDBI, the latter has collected higher amount since it has received bulk subscription from big institutions," said market sources. With IFCI offering higher rates it is felt that the next issues of financial institutions will have to offer better rates. However sources point out that the exact trend of the where the interest rates are going will be clear after the credit policy.
