MUMBAI, July 11: Truck giant Tata Engineering and Locomotive Company Limited (TELCO) has successfully raised $ 200 million through a Yankee bond issue in the international markets.

The issue carries a coupon of 7.875 per cent and an issue price of 99.598 per cent to yield 168 basis points over the 10-year US treasury. The issue, which was lead managed by investment bankers J P Morgan and CS First Boston, was oversubscribed three times after it was placed with over 50 institutional investors across the United States, Europe and Asia.

Telco had actually planned to raise money by floating a 20-year paper but the move bombed with investors refusing to pick up the paper. The move forced the engineering giant to restructure its Yankee bond offering by raising all the $ 200 million through a ten year paper.

Treasury sources said that the reason for the 20 year paper finding no takers was due to a historic low that the US treasury is facing. "Presently the 30 year US Treasury funds are trading at a low of 6.50 per cent and there is hardly any activity. The 20 year Telco paper was to be linked to the 30 year US Treasury. The slackness in this market therefore hit the company," treasury managers said.

Another reason for the rejection of the 20-year paper was due to insurance companies in the US rejecting the issue.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.