We are witnessing spat of Tax Free bonds offer that evoked mixed response from investors. The last offer was from IRFCL that opened for subscription on January 06, 2014 and is still going on with lukewarm response. We have yet another offer from NHAI that opens tomorrow with better coupon rate. Details are as under:
NATIONAL HIGHWAYS AUTHORITY OF INDIA (NHAI) is coming out with a tax free bonds issue on 15.01.14. The bonds having face value of Rs. 1000 are to be applied for a minimum subscription of 5 bonds and in multiples of 1 bond thereof, thereafter. The core issue is for Rs. 1000 crore with a green shoe option to retain oversubscription of Rs. 2698.40 crore thus taking the total size of the issue to Rs. 3698.40 crore.
These bonds carries coupon rate of 8.25% to 8.75% and having tenure of 10 years and 15 years. For retail investors (category IV) it offers 8.52% for 10 years and 8.75% for 15 years. These bonds are rated CRISIL/AAA Stable, CARE/AAA and BWR/AAA Stable, indicating highest degree of safety regarding timely servicing of financial obligations. Such instruments carry lowest credit risk.
The issue is lead managed by EDELWEISS FINANCIAL SERVICES LIMITED, A. K. CAPITAL SERVICES LIMITED, AXIS CAPITAL LIMITED, ICICI SECURITIES LIMITED, while Trustee to bond offer is SBICAP TRUSTEE COMPANY LIMITED, and registrar to the issue is KARVY COMPUTERSHARE PRIVATE LIMITED. The issue opens on January 15, 2014 and will close on or before February 05, 2014. Post allotment, the listing will be done on BSE and NSE. It will be allotted in demat and physical forms, but trading will take place only in demat form. The interest on these bonds will be paid on March 15 every year except the last interest payment along with the redemption amount. As known, the maiden offer from NJAI last year evoked excellent response with oversubscribing in first week itself, this time too it is expected to generate good response. As it offers better rate than ongoing IRFC tax free bonds that offers 8.48% and 8.65% for 10 and 15 years respectively to retail category.
Maximum investment recommended
Review By Dilip Davda on December 12, 2019
Dilip Davda is a veteran financial journalist associated with the Indian stock market since 1978. He has been contributing to print and electronic media on capital markets, insurance, and finance since 1985.
He is widely recognized for reviewing public issues and non-convertible debentures (NCDs) in the primary market. Drawing on over three decades of market experience and close interaction with merchant bankers, his reviews focus on detailed fundamental and financial analysis of companies, with a special emphasis on SME public issues.
Dilip Davda
SEBI Registered Research Analyst – Mumbai
Registration No.: INH000003127 (Perpetual)
Email: dilip_davda@rediffmail.com
Disclaimer: The information provided herein is solely for educational and informational purposes and does not constitute an offer, solicitation, or recommendation to buy or sell any securities. Readers are advised to consult a qualified financial advisor before making any investment decisions. Investments in the securities market are subject to market risks. The author does not intend to invest in the securities discussed.
