Standard Chartered may buy Rs795 crore Nacil bond issue

Mumbai: UK-based Standard Chartered Plc, the second largest foreign bank in India by assets, may buy the entire Rs795 crore of non-convertible debentures, or rupee bonds, being sold by state-owned National Aviation Co. of India Ltd (Nacil), which operates flag carrier Air India, according to three persons familiar with the development.
Standard Chartered is the sole arranger of the sale of 10-year bonds. After buying the bonds, Standard Chartered will have the option of selling the securities subsequently to other financial institutions.
The bond issue, which will hit the market this week, is supported by a sovereign guarantee, or a pledge by the Union government that it will repay investors if Nacil is unable to do so when the bonds mature.
“Standard Chartered has won the mandate (and) they are still evaluating the prospects of underwriting the entire bond issue,” said one of the persons familiar with the development, adding that the pricing and structure were being worked on. He, like the others, declined to be named.
A senior official at the ministry of civil aviation said the deal made sense for the bank because, being backed by a sovereign guarantee, it could “easily resell (the bonds) in the market at a later date”. The bonds will pay interest of a little over 9%, he added, declining to be named because he is not authorized to speak to the media.
28/03/10 P.R. Sanjai and Anita Bhoir/Live Mint

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Categories: NACIL Mar 2010