IOC sources said the syndicated amount would be around $150 million. As of today, nearly $2 billion worth of short term credit is being contracted on a one-to-one basis with banks.

In a syndicated deal, a bank acts as an arranger and invites bids from all over the world. Up to 20 banks can participate in a syndicated deal.

IOC's rationale for going for syndication after a time gap is to enlarge the basket of lenders and allow the smaller banks to participate in the borrowing programme. "We want to tap a pocket in which there is a lot of demand for IOC paper", an IOC official said.

The bid format will also allow the market to feel the presence of IOC. A one-to-one deal goes unnoticed. IOC sources, however made it clear that the syndication attempt will not mean an increase in the cost of funds. The corporation hasbeen contracting for money at around 28 basis point above Libor for several years now, despite sanctions imposed by the US and a downgrade of the country rating by credit rating agencies.

IOC's $600 million syndicated deal in 1997 earned the "best syndicated deal of the year" award from `Euroweek'. But the sharp increase in the short term borrowings programme, to a peak of $3.5 billion in September 1997 when diesel prices were increased and the government was forced to think of the oil bond mechanism as a way out of the balooning deficit on the oil pool account, forced IOC to go back on its syndicated deals and opt for one-to-one, negotiated arrangements.