Financial Daily from THE HINDU group of publications
Thursday, Mar 18, 2004
Financial Daily from THE HINDU group of publications Thursday, Mar 18, 2004 |
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Corporate
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Corporate Bonds HMT seeks Govt nod for Rs 300-cr bonds issue Abhrajit Gangopadhyay
Bangalore , March 17 HMT Ltd has sought the Government nod to sell Rs 300 crore of bonds in the near time to retire part of its high-cost debt, according to company sources. HMT currently has close to Rs 400-crore high-cost debts on its books and it expects to retire them over a few months, tracking the prevailing soft interest regime. The company has sought the Government guarantee to back the fresh sale of papers, sources added. The proposed issue is aimed at repaying Rs 300 crore, the company had borrowed at an average interest rate of 13 per cent. "We would like to take advantage of the softer interest rates," top company sources said, adding that the company raised Rs 40.4 crore on Tuesday through a private placement. The issue, which was `AAA' rated by credit rating agency CARE, carried a coupon rate of 6.5 per cent. The recent papers were sold to repay an older debt that was nearing maturity, sources said. "That was a bridge loan we had taken sometime ago, which was nearing maturity," they added. However, the company ruled out any plan to raise funds overseas through external commercial borrowing route. The company would like to raise funds at cheaper rate and retire its remaining high cost debts as and when "they near maturity", sources added. Such prepayments of costlier debts have been a recent phenomenon in the corporate sector, as companies seek to ease its interest burden on their books, tracking low rate regime. It can be recalled that yield on 10-year Government paper had slid by 129 basis points to 5.2 per cent over the last one year. According to traders, expectation of a drop in inflation rate is likely to support the corporate bond market. India's annual inflation rate fell to 5.32 per cent in the week ended February 28, from 5.94 per cent in the previous week.
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