For a five year investment, an investor will now get an yield of 13.75 per cent as against 14 per cent in the August issue. The coupon being offered by ICICI this time around is also lower than that being offered by IDBI in its Flexibond 4 (which is currently open for subscription).

The fourth tranche of the `Safety Bonds', which opens for subscription on October 26, seeks to raise Rs 400 crore (plus a green shoe option another Rs 400 crore) through the usual fare of Regular Income Bond, Money Multiplier Bond, Encash Bond and Tax Saving Bond. This time around, the coupon on the Regular Income Bond has been scaled down to 13.75 per cent for those opting for annual interest payment compared with 14 per centlast time. In the monthly and semi-annual interest payment option, the coupon is 13 per cent and 13.25 per cent compared with 13.25 and 13.5 per cent, respectively.

For the first time in the `Safety Bonds', ICICI is offering a monthly interest payment option to address the need of investors for frequent cash flows. In the last three tranches, ICICI had only offered the quarterly option. The yield accruing to investors who opt for this option will be 13.8 per cent.

So far as the Money Multiplier Bond is concerned, the yield accruable to investors will 14.2 per cent compared with 14 per cent in the August issue. An investment of Rs 4,000 will grow to Rs 1 lakh after 24 years and five months as against 24 years and one month in the last issue. In the Encash Bond, the brouhaha over the higher coupon for the first year seems to have overlooked the fact that in the second year itself, the coupon is 100 basis points lower than last time. The coupon for the subsequent years is also lower.

For example, in thesecond year, the coupun has been brought down from 13 per cent to 12 per cent, third year from 14.5 per cent to 13.5 per cent. However, for the seventh year the rate has been maintained at 18 per cent.ICICI proposes to raise Rs 3000 crore (plus green shoe option of another Rs 3000 crore) under its umbrella prospectus. So far, the financial institution has been able to raise Rs 1,343 crore through three tranches. Of the three, the August issue fared the best on account of good yields. The reduced rates this time around coupled with the fact that Flexibond 4 (with better yields) is currently open may see fewer investors opting for the ICICI offering.

Besides, with the issue coming close on the heels of the festival season, response from retail investors is likely to be poor.