LIC finds no takers for Rs. 3,400 crore RCap bonds

•   LIC's exposure in bonds worth 3400 Cr. issued by Reliance Capital (RCap) did not attract any takers.
• ARCs (Asset Reconstruction Companies) did not find the option attractive and decide to give it a miss.
• Multiple sources said ARCs did not find the option to buy bonds of the bankrupt firm attractive and decided to give it a miss. A source said IDBI Capital, which has been mandated to sell the bonds, will extend the deadline to July 22. The EoIs are to be followed by an auction to sell the bonds.

• RCap was sent to bankruptcy court in November last year after the company defaulted on its loans to lenders, including Life Insurance Corporation of India (LIC) and several other banks and provident funds.

• Several lenders, including LIC, have made total claims of Rs 25,333 crore against RCap. As the sale of assets has been delayed, LIC had sought bids from ARCs to sell its bonds, according to an advertisement by IDBI Capital Markets & Securities last month.

• The RCap bonds are currently trading at a 70 per cent discount to the bond amount and have already made a big hole in investors’ pockets. If LIC or any other investor has to sell their bonds in the market, then they will recover around 30 per cent of their investment in the bonds.