Mumbai, July 11: Tata Engineering and Locomotive Company (Telco)'s bid to raise long-term money in the international market by floating a 20-year paper has flopped, with investors refusing to pick up the paper.

The engineering giant restructured its yankee bond offering by raising the entire corpus of $200 million through a ten-year paper.

According to a company release on Friday, the issue had a 7.875 coupon and was priced at 99.598 per cent. The yield works to 168 basis points over the 10-year US Treasury. This is the finest pricing of a 10-year paper issued by an Indian corporate in the international market.

Global fund managers pointed out that if the issue is swapped in the international market, the price of the paper will be 130 basis points above the six-month Libor.

JP Morgan and CS First Boston were joint lead managers to the issue. JP Morgan was also the bookrunner.

Treasury sources said there were hardly any takers for the 20-year paper as the US Treasury has plunged to a historic low. "At present the 30 year US Treasury funds are trading at a low of 6.50 per cent and there is hardly any activity. The proposed 20-year Telco paper was to be linked to the 30 year US Treasury. The slackness in this market has hit the Indian corporate's long-term paper," treasury managers said.

Another reason for rejection of the 20-year paper was the indifference of US insurance companies to long-term papers.

"The US insurance companies which invest in long-term debt like 20 to 30-year papers did not show enthusiasm for the Telco paper as it did not have the required guarantee for them to invest," a source said.

The Telco release said the transaction met with strong investor demand and was oversubscribed three times. The paper was placed with over 50 institutional investors across the US, Europe and Asia. "The size, structure and distribution of the bond will ensure this bond serves as an accurate and liquid benchmark for Indian corporates," the release said.

Standard & Poor's awarded a BB+ rating to the issue. It is identical to the sovereign rating. The outlook for the issue was, however, "neutral" while that of the country is "positive".

Telco will raise Rs 300 crore from the domestic market through private placement of non-convertible debentures (NCDs).