The target investor segments are provident funds and other semi-wholesale entities such as regional rural banks. The issue, which opened on December 7, will close on January 15, 1999, and the deemed date of allotment will be February 15, 1999.

The arrangers to the issue are SBI Capital Markets, DSP Merrill Lynch and Badar Financial Services. The NCD are redeemable at the end of 12 years from the date of allotment with a put option to investors at par at the end of the seventh year.

However, IL&FS will not have a call option. The coupon rate is being offered under two options: A fixed rate of 14.50 per cent and a variable rate of 2.50 per cent over and above the rate declared by the central government under Employees' Provident Fund Scheme, 1952. Currently, this rate is 12 per cent.

Thevariable coupon rate has a floor and a cap of 13 per cent and 16 per cent respectively. The coupon under both the options will be payable annually. IL&FS' NCD issue has been assigned triple-A credit ratings by both Icra and CARE.

The ministry of finance, through a notification in June, revised the investment pattern for non-government provident funds, superannuation funds and gratuity funds with effect from April 1, 1998. The revision allows investment in private sector bonds and securities which have an investment grade rating from at least two credit rating agencies up to 10 per cent of the incremental accretions.