Monday, January 30, 2012

HUDCO Tax Free Bonds

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Housing and Urban Development Corporation (HUDCO) has come out with an issue of tax free bonds with a face value of Rs 1,000 each in the nature of secured, redeemable, non-convertible debentures having benefits under section 10(15)(iv)(h) of the Income Tax Act, 1961 aggregating to Rs 2,000 crore with an option to retain an oversubscription of up to Rs 4,684 crore.

The issue will open on January 27, 2012, and will close on February 6, 2012, or earlier, or may be extended by such period, upto a period of 30 days from the date of opening of the issue, as may be decided by the board of the company or by a duly constituted committee.

The bonds carry a coupon rate of 8.10% for Tranche-I Series 1 Bonds and 8.20% for Tranche-I Series 2 Bonds on per annum basis. Additional coupon rate of 0.12% per annum for Tranche-I Series 1 Bonds and 0.15% per annum for Tranche-I Series 2 Bonds shall be payable to the allottees under Category III (retail investors investing less than Rs 5 Lakh) which will aggregate to coupon rates of 8.22% and 8.35% respectively. However, the aforesaid additional interest of 0.12% p.a. and 0.15% p.a. shall only be available to the original allottees of the bonds under Category III, and shall not be available to the bondholders of such bonds under certain instances.

The Tranche-I Series 1 bonds and Tranche-I Series 2 bonds can be redeemed after 10 years and 15 years respectively from the deemed date of allotment. The bonds can be issued in both DEMAT and physical form but trading can happen only in DEMAT form.

The minimum application size is 10 bonds and in multiples of 1 bond thereafter. The Tranche-I Bonds have been rated 'CARE AA+' by CARE indicating high degree of safety for timely servicing of financial obligations & carry very low credit risk and 'FITCH AA+ (ind)' by FITCH indicating Outlook on National long-term rating is stable.

The lead managers to the issue are Enam Securities Private Limited and SBI Capital Markets Limited. The debenture trustee to the issue is SBICAP Trustee Company Limited.
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