Thursday, March 7, 2013

IIFCL Tax Free Bonds 2012-2013

India Infrastructure Finance Company Limited (IIFCL), a Government of India undertaking, has come out with Rs 9215 crore public issue of tax free secured redeemable non-convertible bonds. The issue size is Rs 1500 crore with an option to retain over-subscription up-to Rs 9215 crore. For those individuals who are in the highest tax bracket, this is a good source of tax free secured interest income. Last year the interest rates on tax free bonds offered were higher but this issue is still good for those in highest tax bracket as the interest rates have come down and are expected to come down even more. IIFCL got incorporated in early 2006 and was created with an objective of providing innovative financing solutions to promote and develop world class infrastructure in India. This is the third tax free bond issue this year after REC and PFC. REC and PFC did not allow NRIs to apply for these bonds during their offer period. But, NRIs can participate in the IIFCL issue. They can apply for these bonds both on repatriation basis as well as non-repatriation basis.

Opening and Closing dates:

First Tranche: The issue shall open on 26 December, 2012 and shall close on 11 January, 2013.
Second Tranche: The issue shall open on 25 February, 2013 and shall close on 15 March, 2013.

Face Value:

The face value is Rs 1000 per bond and the minimum application for subscription in retail segment is Rs 5,000 with maximum at Rs 10 Lakhs in increment of Rs 1000.

Available options:

Interest rates for first tranche:
Interest Rate %
Period
Retail
HNI / Corporate
10 yr
7.69%
7.19%
15 yr
7.86%
7.36%
20 yr
7.90%
7.40%


Interest rates for second tranche:
Interest Rate %
Period
Retail
HNI / Corporate
10 yr
7.36%
6.86%
15 yr
7.52%
7.02%
20 yr
7.58%
7.08%

Those investing up-to Rs 10 lakhs are retail investors and above that are High Net-worth Investors (HNIs) for the purpose of this issue. These bonds carry a step-down clause - the coupon gets reduced by 50 basis points for retail investors once the bonds get listed or the ownership of bonds changes hands. Interest would be paid annually for all categories.

CRISIL and ICRA has rated AAA grade to the bond issue indicating high grade safe investment. These bonds would be listed and tradable on NSE and BSE. No tax would be deducted at source on income and the allotments would be on first come first serve basis.

The issue can be subscribed in DMAT as well as physical form.

National Highways Authority of India, Housing and Urban Development Corp, National Housing Bank, Indian Railways Finance Corp, IIFCL, Ennore Port, Jawaharlal Nehru Port and Dredging Corporation are among companies permitted by the government to sell tax-free bonds under Section 10 (15).

Allotment:


Click here to check allotment status!


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