RIB issue closing date extended

MUMBAI, Aug 17: State Bank of India SBI has extended the earliest closing date of the Resurgent India Bonds RIB by a week -- from Aug...

MUMBAI, Aug 17: State Bank of India SBI has extended the earliest closing date of the Resurgent India Bonds RIB by a week 8212; from August 17 to August 24. The issue has mopped up 1.45 billion till the last weekend and is expected to mobilise close to 2 billion by Monday. quot;As expected the response to the issue has been extremely good. Available information also indicates that an overwhelming large number of small applicants are still wanting to apply for the bonds. Because of persistent demands from such investors worldwide, keeping in view the fact that there were a number of intervening holidays in all the markets reached by the bank viz. the South East Asia, India, Middle East and the US, the bank has decided to close the issue at the end of business hours on Monday, August 24,quot; an SBI release said.

Sources said that a large number of NRI investors are withdrawing their deposits and investing in the RIBs. quot;This is taking time and as a result the mopup has so far not that phenomonal,quot; a sourcehandling the issue said. NRIs are exiting out of FCNR B deposits and NRENR deposits to invest in RIBs as the interest rates being offered by the RIBs are very attractive at 7.75 per cent for five years for dollar funds.

8220;The view that is being inferred from this deferred closure of the RIBs is that the issue has not attracted the response that was anticipated by SBI. The fact that FCNR B account holders are shifting to RIBs is not a good sign as it will not contribute to any net inflows of dollars,8221; said a banker.

In any case these delays in completing the issue will not be taken well by the financial markets, especially when there was a lot of hype built up over the early closure of the issue. Although SBI insiders claim that the issue is quot;on coursequot; and over 38,000 applications were picked up by NRI investors, India8217;s second sovereign issue by proxy failed to set the global markets 8212; stretching from the Middle East to the US 8212; by fire. The fervour of patriotism has also failed to lift thesentiment. Analysts attributed the quot;lukewarmquot; response to the issue is the apparent quot;mismanagementquot; in the US in marketing the issue.