Gail unveils bond issue, gets bids for 1k cr

MUMABI: State-owned Gas Authority of India (Gail), the country’s largest gas transmission and marketing company, has launched 10-year bond issue to raise funds at an upper cap of 8.9% per annum. The issue, which opened on Tuesday, has got close to Rs 1,000 crore bids between 8.85 and 8.89%.

According to distributors, the firm has been negotiating with arrangers for the past few days to raise funds at not more than 8.8%. However, with the cost of funds inching up, it could not get commitment from the arrangers.

Interestingly, even at this rate, arrangers were not willing to underwrite the issue on their books.

Gail is looking to raise Rs 500 crore with an option to raise another Rs 250 crore by the way of a green shoe option through private placement route, according to the distributors. The fund-raising has come in the back of tight liquidity conditions prevailing in the industry.

Secured, taxable, non-convertible bonds, comprising detachable and separately transferable redeemable principal parts (STRPPs) will have a tenure of 10 years.

Investor will not have any ‘put’ option, however, Gail will have the ‘call’ option at the end of seventh year from the deemed date of allotment. The issue will close on Wednesday.

The funds would be raised to augment its medium- to longterm rupee resources, including meeting the general capital expenditure requirement. Some of the 11 arrangers to the issue include Citi, HSBC, IDFC, Kotak, Almondz and Standard Chartered among others.

Recently, PFC received bids worth over Rs 1,500 crore for its bonds issuance of about Rs 150 crore in the nature of debenture . Offered at a coupon of 8.78% through the 10-year instrument , while the issue attracted direct investment of about . 500 crore from LIC, the rest of the amount came through pre–arranged commitment of at least Rs 50 crore from each of the 19 arrangers.

About a month back, Rural Electrification Corporation (REC) had raised funds through similar bonds at 8.8%.