Mumbai, Aug 17: GE Capital (India) Ltd, a fully-owned subsidiary of the US-based GE Capital, is tapping the debt market with a coupon rate of 11.25 per cent. This is the lowest rate at which a non-banking finance company is raising money in the debt market and is likely to set a benchmark for top-rated finance companies.

The issue, which is being solely lead-managed by DSP Merrill Lynch, has an issue size of Rs 40 crore. According to the lead manager, the paper has an 18-month tenure with no call and put option. The instrument has been rated AAA (SO) by Crisil. Merchant banking sources said that the entire debt is being raised through the bookbuilding route. "We have given an indicative coupon rate between 11 per cent to 11.50 per cent. Most of the money has come at 11.25 per cent and it is likely that the final coupon will be fixed at this level," a source said.

GE Caps, which recently took over SRF Finance and is negotiating to pick up a stake in Karvy Consultants, has decided "in principle" to get out of high-cost paper and substitute it with low-cost debt. It has already got itself rated for Rs 100 crore. The company, which has the largest asset base among finance companies in India, had in the previous financial year raised debt at as high a rate as 18 per cent. "Whenever there is a call option they will be exercising it," a source said. So far they have redeemed one tranche of high-cost debt in May while the second tranche is coming up soon.

This is the second time that the company is raising money after the slack season credit policy was announced. In May it had raised debt with a five-year maturity at 13.50 per cent. The cost was similar to that of IDBI's five-year paper.

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