Sail To Trim Bond Issue Coupon Rate

The public sector major, Steel Authority of India (SAIL), is to pare down the coupon rate for its Rs 300-crore bond issue to be privately placed next week, following encouraging pre-market reports from merchant bankers.

"The coupon rate will be in the range of 14.5 to 14.75 per cent," a top SAIL official said yesterday.

He indicated that the rate would be closer to 14.5 per cent as against 14.75 per cent considered earlier.

The bond issue has a greenshoe option of up to Rs 200 crore and will open in the first week of May.

The official saidthat the Steel Authority of India is likely to bring down the coupon rate on assurance from merchant bankers that its issue will sail through even at a lower price.

 

The interest on the bond issue, which has received a AA+ rating from both Crisil and Icra, reflects the fundamental strength of the steel major, the official added.

He said liquidity is available in the market and exuded confidence on the issue being fully subscribed.

The official added a final decision on entering the market will be made in the next two days.

This will be the first of at least two more tranches of bond issues that the Steel Authority of India plans to make in the current financial year.

The funds raised will be used to finance SAIL's on-going modernisation programmes at its Rourkela and Bokaro plants.

The rehaul process at these two plants is in its final stages and nearing completion, the official added.

SAIL had raised Rs 900 crore last year through the private placement route. The funds were mobilised at an average rate of 16-17 per cent.

The easing of coupon rates this year indicates the comparatively easy liquidity position in the market.