The Rs 500-crore SAIL issue has been assigned a `LAAA' rating (SO) by Icra, four notches up from its outstanding rating of the loss-making public sector undertaking's debt portfolio of `LBBB+', indicating speculative grade.The rating is indicative of the unconditional and irrevocable guarantee given by the government of India for repayment of principal and interest on the float.

SAIL on Friday entered the private placement market with a Rs 300-crore issue with a greenshoe option to retain another Rs 200 crore having a seven-year tenure. The instrument is a unsecured, taxable, redeemable bonds in the form of promissory note. Darashaw & Company is the sole arranger of the issue.

The coupon offered by SAIL for the seven-year instrument with a put and call option at the end of five years is 75 basis points lower than the bond issue of Karanataka Neeravari Nigam expected which is to hit the market on December 27. The coupon on the SAIL instrument is arrived at through the book-building route is in the band of 11.85 per cent and 12 per cent. The instrument also offers a second option carrying 12 to 12.15 per cent coupon on a seven-year maturity period.

Karnataka Neeravari Nigam Ltd is expected to enter the private placement market with a Rs 125-crore issue with a right to retain oversubscription on December 27. The instrument which is a secured redeemable non-convertible debenture having a maturity profile of seven year will offer investors two options. The first option will offer investors, a put and call option at par at the end of five year. The annualised coupon pegged for the paper under the first option will be 12.75 per cent. Under the second option, investors will be allowed a put and call option at par at the end of third and forth year. This option will offer investors a fixed coupon of 12.40 per cent for the first three years. For fourth and fifth year, the coupon fixed will be 2 per cent higher than the RBI declared yield on one year government of India dated securities.

"As the interest rates are volatile at the shorter end, the issue is structured in such a manner to reduce the risk of short-term fluctuations in the interest rates," said merchant banking sources.

Telco is also in the market with a seven-year paper for Rs 100 crore with right to retain oversubscriptions. The instrument offers a put option at the end of first year and both put and call option at the end of second year. The coupon of the instrument is within the band of 11.40-11.50 per cent. Tidco is also in the market with a Rs 200 crore issue with a greenshoe option. The instrument, carrying a fixed coupon of 12.90 per cent, offers a put and call option at the end of five years.