This is the first time a debt instrument is being floated linked to the inter-bank call-money market and is likely to create a new benchmark for medium-term corporate-debt issues. The bond issue is being privately placed with financial institutions (FIs), banks and insurance companies. This is also the first issue to be launched after the announcement of the credit policy. GE Caps, a 100 per cent subsidiary of GE Capital Corporation of the US, is one of the larger capitalised non-banking finance companies (NBFCs) in the country.

DSP Merrill Lynch chairman, Hemendra Kothari, said: "We have tried to create a new benchmark keeping in mind both the issuer and the investor. With this instrument, investors will havean opportunity to hedge against short-term interest-rate volatility."

ABN-Amro Bank country treasurer, Vishnu Deuskar, said: "The structure offers an effective hedge to investors and also establishes a new credible and transparent benchmark."

The debenture will carry an interest, which will be compounded on a daily basis at the applicable Reuters Mibor plus four hundred basis points. Reuters Mibor is a daily annualised interest rate, a composite weighted average of the call-money business transacted by 17 institutions.

The debenture, with a face value of Rs 50 lakh each, will have a tenor of 36 months and put and call options at the end of 12 months and 24 months respectively. The debt issue has been rated AAA (SO) by Crisil, and IND (AAA) (SO) by Duff & Phelps India. The debenture is also backed by a $200- million "Keep Well" agreement with GE Capital corporation.

The Industrial Credit & Investment Corporation of India (ICICI) is the trustee to the debenture holders.

Earlier, debt instruments werefloated by various Financial Institutions and corporates, pegged to the 364-day treasury-bill cut-off yield or the bank rate or the prime- lending rate offered by the State Bank of India. But this is the first time an instrument is being linked to the call rate.