Second tranche by March 15

Our Bureau

New Delhi, March 8

The Finance Ministry has announced the issuance of special bonds amounting to Rs 5,750 crore to three oil-marketing companies to compensate them for under-recoveries in their domestic LPG and kerosene (PDS) operations during the current fiscal.

This is the first tranche of the special bonds and the second tranche for a similar amount is likely to be issued by March 15.

Three categories of bonds with varying coupon rates and tenures have been issued. While special bonds amounting to Rs 2,000 crore with coupon of 7.33 per cent would have term of three years, the Finance Ministry has also issued special bonds amounting to Rs 2,000 crore at coupon of 7.47 per cent with term of six years. The third category of special bonds amounting to Rs 1,750 crore would carry a coupon of 7.61 per cent and have a term of nine years. An official release issued on Tuesday night said the special bonds would be issued at par to Indian Oil Corporation Ltd for Rs 3,449.07 crore, Bharat Petroleum Corporation Ltd for Rs 1,100.81 crore and Hindustan Petroleum Corporation Ltd for Rs 1,200.12 crore.

The investment in the special bonds would not be reckoned as an eligible investment for the purpose of statutory liquidity ratio (SLR).

The special bonds would be transferable and eligible for market ready forward transactions (repo). The bonds, however, would not be an eligible underlying security for ready forward transactions (repo/reverse repo) with the Reserve Bank of India.

The Government has already announced intent its to complete the special bonds issuance programme (amounting to Rs 11,500 crore) to the oil marketing companies by March 15.

(This article was published in the Business Line print edition dated March 9, 2006)
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