FCI raises Rs 8,000 crore via eight-year maturity bonds

MUMBAI: State-owned Food Corporation of India has raised Rs 8,000 crore by selling eight-year maturity bonds with an annualised interest rate of 9.95%. Big institutions like top mutual fund houses, insurance companies and exempted provident funds have invested in the issue, dealers with the direct knowledge of the matter said.

“Investors across the spectrum subscribed in small to medium quantity. But, neither LIC India nor Employee Provident Fund Organisation or EPFO have subscribed any amount,” a banker told ET on condition of anonymity.

Provident funds run by Companies which are not part of EPFO are called exempted PPF. There are around 2000 PPFs in India.

About 10 investment bankers were involved to build the issue. These bonds are privately placed unlike a public issue. The rate offered is almost similar to the yield offered by state development loans or SDL. The issuance is claimed to be the largest issue in terms of size in private placement arena.

Some two years ago Air India had brought out similar-like large issue to raise Rs 7,400 crore, which was largely subscribed by LIC India and EPFO.

“Many traders too subscribed the issue hoping to sell them in the secondary market at a profit,” said another banker adding that from April onwards bond yields are likely to fall pushing prices up.

Bond prices and yields move in opposite direction.