Financial Daily from THE HINDU group of publications
Friday, Jun 07, 2002
Financial Daily from THE HINDU group of publications Friday, Jun 07, 2002 |
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Money & Banking
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Short Term Instruments Info-Tech - Telecommunications Bank consortium to raise Rs 870 cr for Ericsson Rajalakshmi Menon
MUMBAI, June 6 A CONSORTIUM of banks is raising around Rs 870 crore for Ericsson, the global cellular equipment manufacturer. The loan, which will be lead managed by Standard Chartered Bank, is for a period of 90-120 days and is expected to carry a coupon of around eight per cent. According to bankers, this is one of the highest loan amount being raised by banks in the current fiscal. In February, the Tata group had raised around Rs 1,300 crore for a tenor of one year with a coupon of 8.70 per cent. Bankers said that Ericsson, which is supplying telecommunication equipment, including digital switches, to Bharat Sanchar Nigam Ltd (BSNL), requires funds to meet its short-term requirements. BSNL is expected to repay the loan amount after a period of around 120 days. The entire loan amount will be raised through a series of transactions whereby Ericsson will draw bills of exchange on BSNL, which the latter will accept. The loan amount is without recourse, which means that in case BSNL is unable to pay the loan amount, banks cannot recover the amount from Ericsson. The loan raised will help Ericsson to keep its funds flow intact, enabling the company to keep its liquidity position unhampered, said an official with one of the banks which is participating in the syndication. Around 15 banks including SBI, Bank of India and Union Bank of India, are expected to participate in the consortium that is raising the fund. "Banks are going to take exposure on BSNL and not on the supplier,'' said the official. He added that banks were increasingly looking at other avenues to deploy their funds instead of directing all their funds into money market instruments. "Banks would prefer to lend their funds to Triple A rated corporates, where the credit risk is minimal, rather than earning around 6-6.5 per cent by deploying their funds in the call money market,'' added another banker.
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