MUMBAI, January 17: Industrial Development Bank of India (IDBI) today decided to go ahead with the launch of third series of Flexibonds on January 23 without a change in interest rates despite Reserve Bank's decision to hike bank rate and cash reserve ratio and the possibility of a general rise in interest rates. Ruling out postponement of the issue on account of the RBI measures, IDBI said ``a vigorous marketing campaign has been mounted by IDBI and meetings held at over 70 important commercial centres including metros in the last few days with the media, lead managers, brokers and a cross section of investors.''According to sources, the IDBI top managment will meet in Mumbai on Monday to take a final view on the possiblity of raising the coupon rates of the debt instruments. ``We need just 48 hours to replace the already available application forms with new interest rate printed on it,'' sources said. The IDBI release clearly stated the coupon rate will not be hiked.
``The coupon rate of 12.5 per cent
on infrastructure bond and tax benefits available as stated earlier give an actual return to the investor which is much higher than the coupon rate,'' IDBI said. Similarly, the growing interest bond of the Flexibond series has a built-in increase in the interes rates ranging from 10.5 per cent in the first year and going upto 18 per cent in the fifth year.
The higher coupon rates offered in subsequent years cover the possible increase in the market interest rates following the bank rate hike.
``The yield to the investors offered by it would still be in line with the market expectation notwithstanding the recent hike in the bank rate,'' IDBI said.
Another mega debt issue -- the seven-year Rs 500 crore Bank of India subordinated debt -- which was expected to hit the market in the third quarter of the current fiscal is likely to to be postponed, said BoI sources. ``We are not in hurry and will prefer to wait till market calms down, which unlikely during this fiscal,'' said sources. `` When we can wait to
borrow at low rate in future, we do not want to rush to the market with higher rate,'' sources said. Both the finance ministry and RBI had already cleared the issue, sources said.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
