Mumbai: L&T Finance, a fully-owned unit of Indian engineering conglomerate Larsen & Toubro, on Monday said it will open a retail bond sale on Tuesday.
It will sell two series of secured three-year bonds with a maximum yield of 8.58 percent, rated ‘AA-plus´ by ICRA and CARE.
The first series has a coupon rate of 8.40%, payable half-yearly, resulting in an 8.58% annualised yield.
The second option pays a coupon of 8.50%, payable annually, with the same annualised yield.
“Definitely it’s a good price when you compare it with the alternative investment options a retail investor has in terms of fixed income securities...” said N. Sivaraman, L&T’s executive vice president, financial services.
The issue was priced based on the company’s borowing costs, which currently stand at a weighted average of around 8.25% per day, he added.
Bankers said the relatively lower yield on the bonds is due to the strong reputation of L&T Finance’s top-rated parent. Of the total Rs500 crore of the issue, 30% has been reserved for retail investors and another 30% for qualified institutional buyers.
The issue is scheduled to close on 22 February and JM Financial, Kotak Mahindra Bank and Citigroup are the arrangers.
This is the second time L&T Finance has tapped the retail debt market, following its offering in August.
Retail debt issues are extremely infrequent in India, though 2009 was relatively busy on this front, with three retail debt issues.
State Bank of India, the country’s largest bank, is the next issuer set to market its debt to retail investors.