Tuesday, March 6, 2012

Rural Electrification Corporation NCD

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Rural Electrification Corporation Limited (REC) has come out with secured non-convertible debentures (NCD) of Rs 1500 crore with an option to retain oversubscription upto an aggregate amount to Rs 3000 crore. REC is a public financial institution and engaged in the financing and promotion of transmission, distribution and generation including renewable energy projects throughout India. The company is one of the only 16 Indian public sector undertakings to be granted “Navratna” status by the Department of Public Enterprise by virtue of its operational efficiency and financial strength.

The issue opens on 6 March, 2012 and closes on 12 March, 2012.

The interest will be paid annually and will be tax free under section 10(15)(IV)(h) of IT Act, 1961.

There are 2 options with this issue:

  • Bond Series I: Tenor is 10 years and coupon of 7.93% for Category I and II investors and 8.13% for Category III investors (retail upto Rs 1 Lac investment)
  • Bond Series II: Tenor is 15 years and coupon of 8.12% for Category I and II investors and 8.32% for Category III investors (retail upto Rs 1 Lac investment)
The REC NCD issue has been assigned AAA credit rating by CRISIL, CARE, ICRA and Fitch indicating above average fundamentals.

The issue will be listed on BSE and minimum application size is 5 Bonds (Rs 5000) and multiples of 1 Bond (Rs 1000) thereafter.

REC offers a safe tax free investment at a good interest rate. Investors in the highest tax bracket can consider this investment for some proportion in fixed income asset class.
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