Date:25/02/2006 URL: http://www.thehindubusinessline.com/2006/02/25/stories/2006022503700500.htm

Back Nod to amend oil bonds structure

Our Bureau

New Delhi , Feb. 24

The Union Cabinet has given its approval to partially amend the oil bonds structure by permitting the coupon rate to be fixed on the basis of the prevailing market rate of interest on Central Government securities.

The Government securities on which the interest rates would be benchmarked would have to be of comparable residual maturity on the date of issue of special securities. The securities would be payable six-monthly with suitable spread of non-SLR status having the following maturities — three years (Rs 2,000 crore), six year (Rs 2,000 crore) and 9 years (Rs 1,750 crore).

Earlier, the Government had proposed a coupon rate of 7 per cent on the oil bonds.

To restore the financial health of the oil marketing companies, the Government had decided to issue oil bonds worth Rs 11,500 crore in two tranches.