Tata Steel to raise Rs 500 cr with innovative bond offering
Tata Steel is in talks to investors to tap the bond market with an innovative offering. The co will pay a low annual interest of 2% on the proposed instrument.
MUMBAI: Tata Steel, one of the world's top steel producers, is in talks to investors to tap the bond market with an innovative offering. The company will pay a low annual interest of 2% on the proposed instrument and a redeeption premium on maturity.
The company is planning to raise Rs 500 crore from the 10-year bonds.
"The company has indicated that the redeemption premium would work out to 10.5%, however they could bargain for a lower number following the larger than expected rate cut by RBI," said the treasury head of a commercial bank.
The new structure primarily aims at rewarding those who would hold the paper till maturity since it has a large redeemption premium.
"This structure may attract insurance and pension companies who prefer to hold bonds till maturity but it may fail to elicit interest amoung bankers and fund houses who always look at short term returns," said a money market dealer.
The company is yet to formally announce details of the new structure to investors, dealers said.
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