TISCO made an issue of perpetual bonds giving a coupon of 11.8% (yes you are reading it right) in March 2011. Funnily this was a private placement and not open to the public. Now one year later one of the private institutions is offloading these bonds at a premium to face value of close to 12%. This is after getting the interest of 11.8% for the first year resulting in a total return of close to 23.8%.
Diwali came real early for these insitutions.
Now the question is?
1. Why did Tisco sell only privately when they could have sold the same to the public and possibly also saved some money on the coupon rate?
2. Why is the financial institution selling this bond now to its clients when the RBI has just signalled a rate reversal in policy stance?
The Tisco CFO sure has some explaining to do, as to how he failed to secure the best rate and terms for the debt raised by him? This is surely not some unknown brand for him to justify this gift of 12% to the financial institutions OR was it the payback for these institutions supporting the public offer made by the company at 610/- ?
Diwali came real early for these insitutions.
Now the question is?
1. Why did Tisco sell only privately when they could have sold the same to the public and possibly also saved some money on the coupon rate?
2. Why is the financial institution selling this bond now to its clients when the RBI has just signalled a rate reversal in policy stance?
The Tisco CFO sure has some explaining to do, as to how he failed to secure the best rate and terms for the debt raised by him? This is surely not some unknown brand for him to justify this gift of 12% to the financial institutions OR was it the payback for these institutions supporting the public offer made by the company at 610/- ?
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