IRFC, HUDCO tax-free bonds to hit markets today

Tax-free bond issues of two Government-owned agencies — Indian Railway Finance Corporation (IRFC) and HUDCO — are to hit the market on Friday. The bonds have a tenor of 10 years and 15 years, and offer higher rates for retail investors. But, investor returns of HUDCO are marginally higher than IRFC. IRFC funds rolling stock acquisition of the Railways, while HUDCO provides housing finance to various agencies.

IRFC

The bonds of IRFC, the financing arm of Indian Railways, shall carry a coupon rate of 8 per cent per annum for 10 years and 8.1 per cent for 15 years. For the retail subscribers, who can invest a total of up to Rs 5 lakh, IRFC offers an additional coupon rate of 0.15 per cent (10 year bonds) and 0.2 per cent per annum for 15-year tenor.

The bonds are proposed to be listed on the NSE and BSE, said a Railways release. Face value of each bond is Rs 1,000, and bonds can be subscribed for a minimum of 10 and in multiples of five thereafter, it added. IRFC proposes to raise Rs 3,000 crore, with an option to retain oversubscription of up to Rs 6,300 crore.

The issue closes on February 10 or earlier (subject to the issue being open for a minimum period of 3 days).

HUDCO

HUDCO wants to mop up Rs 4,685 crore from this issue. For retail investors, the coupon rate is 8.22 per cent (10 year issue) and 8.35 per cent (15 year issue). Retail investors can invest up to Rs 5 lakh for availing themselves of these coupon rates. For other investors, the coupon rates are 8.1 per cent (10- year tenor) and 8.2 per cent (15-year tenor).

mamuni@thehindu.co.in

HUDCO to raise Rs 4,685 cr via tax-free bonds

Housing and Urban Development Corporation Ltd (HUDCO) today said it will raise up to Rs 4,685 crore through a public issue of tax-free bonds.

The company said that it had filed a draft prospectus yesterday for the same with the National Stock Exchange (NSE), where these bonds would be listed.

“The company proposes to make a public issue of tax-free bonds of face value of Rs 1,000 each in the nature of secured, redeemable, non-convertible debentures... aggregating up to Rs 4,684.72 crore,” HUDCO said in a statement.

These bonds would have tax benefits for subscribers under the Income-Tax Act, 1961.

HUDCO is a public sector firm fully owned by the government for the financing of housing and urban infrastructure activities in India.

“The Finance Ministry has given us approval for raising Rs 5,000 crore through tax-free bonds. We have raised Rs 315 crore through private placement of bonds. Now we are coming up with a public issue of tax-free bonds to raise up to Rs 4,685 crore,” HUDCO Senior Executive Director, Mr R.K. Khanna, told PTI.

The funds would be utilised in project financing, he said, adding that the public issue of tax-free bonds is likely to be launched by the month-end.

“In the 2010-11 fiscal, we sanctioned Rs 19,762 crore and out of that, Rs 5,293 crore was in housing and about Rs 14,500 crore in infrastructure projects. We are targeting the sanction of Rs 24,000 crore this fiscal and out of that, 25 per cent would be toward housing schemes,” he said.

The lead managers of the issue are Enam Securities and SBI Capital Markets. The trustee for the bondholders is SBICAP Trustee Company.

Tax-saving bonds find little favour with investors

Tax-saving bonds seem to have become an opportunity wasted for the government, which is struggling to raise funds for its ambitious infrastructure development programme. The bonds’ unattractive structure seem to have found little favour with eligible taxpayers and infrastructure finance companies are hoping the government would do something to enhance product appeal.

“The incentive for taxpayers is very little. We have received only Rs 18 crore till now via tax-saving bonds, although our capacity to raise funds through these bonds is as much as Rs 6,000 crore,” said H D Khunteta, director, finance, Rural Electrification Corporation (REC). “We are requesting the government to increase the tax-saving limit up to Rs 50,000 or more.”

An infrastructure finance company can raise as much as 25 per cent of the incremental infrastructure investment of the previous financial year via these bonds. Currently, (unlike completely tax-free bonds), investors can save tax only up to Rs 20,000 of taxable income in these under Section 80 CCF of the Income Tax Act, over and above the Rs 1 lakh investment under Section 80C by investing in these bonds.

Some firms said the government was not very hopeful about the product. "Many of us had recommended the government make it Rs 50,000. And, we believe if it does become Rs 50,000, the response might actually be more. One reason the government had not accepted the demand was that last year the response was not very good. So, the government was not sure about the sustainability of these instruments," said Suneet Maheshwari, chief executive officer, L&T Infrastructure Finance. If the response is good this year, they might increase the limit to Rs 50,000, he added.

Sole reliance on retail participation has also taken a toll on the success of this kind of debt instrument. “For tax-saving bonds, the number of subscriptions required are many, as it is a product targeted at retail investors, to allow their participation in the country’s infrastructure development,” said Saud Siddique, joint managing director, SREI Infrastructure Finance.

Also, as compared to other instruments, the rates of return are much lower. For instance, a completely tax-free bond of the National Highways Authority of India or Power Finance Corporation offers a high coupon and even allows tax exemption on interest income for periods of 10 and 15 years. The gains derived via tax-free bonds are not capped, as the investment limit is very high. In tax-saving ones, investors get benefits on investments of only Rs 20,000 (Rs 6,600 for the highest income tax bracket). On the other hand, tax-free bonds like NHAI or PFC help investors earn returns of eight-plus per cent for a longer period, and without any tax. In effect, the final rate of return is 11.5-12 per cent.

Infrastructure finance companies are also taking small steps at a time with respect to the size of tax-saving bond issues. For example, SREI, which can raise up to Rs 500 crore via tax-saving bonds,has come out with a maiden issue of only Rs 300 crore, gauging the market. “We are just testing the response and, thus, have come out with a smaller issue size without a greenshoe (over-allotment) option,” said Sanjeev Sancheti, chief financial officer.

PFC, one of the most successful fund raisers, has raised about Rs 100 crore so far against its capacity to raise as much as Rs 5,300 crore through tax-saving bonds. It is planning to issue the second tranche by January end.

Many arrangers also said while one got upfront rebate on taxable income, the instrument does not allow benefits to retail investors who do not have savings of at least Rs 1 lakh. However, many also said that low levels of awareness among investors was a reason for the lukewarm response.

"A tax-saving bond as an instrument has the potential to raise Rs 20,000 crore every year, if just about one crore out of the 3.5 crore taxpayers of the country invest. There is enough opportunity for infrastructure companies to raise money but investor awareness needs to be created,” said Anup Bagchi, managing director and CEO, ICICI Securities, said.

Source: Business Standard

L&T Infra's second tranche of long-term bonds opens on January 10

L&T Infrastructure Finance Company is looking to raise over Rs 500 crore through its second tranche of tax-saving long-term infrastructure bonds. The issue opens on January 10 and closes on February 11.

Last month, the infrastructure finance company raised Rs 530 crore through first tranche of bonds. It is looking to raise a total of Rs 1,100 crore in the current financial year.

In its latest bond issue, the company is offering a coupon rate of 8.7 per cent, which is slightly lower than 9 per cent offered in the first issue. This is because the rate is linked to the yield of the previous month's government securities, said Mr Suneet Maheshwari, Chief Executive, L&T Infrastructure Finance.

Mr Y. M. Deosthalee, Chairman and Managing Director, L&T Finance Holdings, said that this is perhaps an indication that interest rates have peaked.

“This is probably our last issue in the current financial year,” Mr Maheshwari said.

Investment of up to Rs 20,000 in the tax-free long-term infrastructure bonds is eligible for income-tax exemption under Section 80CCF.

Last quarter of the year is when most investors normally make investments to save tax. Hence, there will be lot of interest in the issue, said Mr Atul Mehra, Managing Director and Co-CEO, J. M. Financial, one of the lead managers to the issue.

There is also plenty of interest from investors in Tier-II cities, for whom the limit of Rs 20,000 would be sufficient, said Mr Anup Bagchi, MD and CEO, ICICI Securities, the other lead manager to the issue.

Other tax-free bonds

IDFC Ltd has announced its second tranche of long-term infrastructure bonds, which will open between January 11 and February 25. In its first tranche the company had raised Rs 538 crore, at a coupon of 9 per cent. It is looking to raise a total of Rs 5,000 crore by March 2012.

SREI Infrastructure Finance Ltd is also looking to raise about Rs 300 crore through its first tranche, the subscription for which closes on January 31. The coupon rates range from 8.9 to 9.15 per cent.

priyan@thehindu.co.in

Srei Infra yet to decide on second trench of bond issue

AHMEDABAD" Srei Infrastructure Finance on Monday said that it would decide on the second trench of the public issue of tax-free bonds depending upon the response to the tranche-I issue that seeks to raise upto Rs 300 crore.

"Depending on the response to this particular issue (tranche-I) we will decide whether to go for the second tranche or not," SREI CFO Sanjeev K Sancheti said. "We are now focusing more on the infrastructure debt fund through the mutual fund route to be launched by us," he said.

Srei, which was accorded a status of an Infrastructure Finance Company (IFC)by RBI in 2011, is raising up to Rs 300 crore through the first tranche of the issue which is currently on and closes on January 31.

The company had filed prospectus with the market regulator SEBI to raise Rs 500 crore through a public issue of tax free infrastructure bonds, by end of this fiscal.

IDFC, another IFC company, had mopped up Rs 538 crore from the first tranche of its tax-saving long term infrastructure bonds from around 2.7 lakh retail investors recently. IDFC company had plans to raise Rs 5,000 crore from the infra bonds issue this fiscal.

L&T Infra Finance, today, announced another trench of tax saving bond issue to raise Rs 570 crore though at a lower coupon rate of 8.70 per cent. It raised Rs 530 crore in the first trench at an interest rate of nine per cent.

Srei Infra's bonds with a face value of Rs 1,000 will be issued in four series at an annual interest rate of 8.90 per cent for series 1 and 2 with 10-year maturity and 9.15 per cent for series 3 and 4 with 15-year maturity. Bonds have a lock-in period of five years.

The company's consolidated disbursements last fiscal stood at Rs 14,400 crore. It expects a 25-30 per cent growth in disbursements this fiscal.

Its total market borrowings stood at Rs 13,000 crore as of September, 2011. It gross NPA's range between 2 to 2.3 per cent.

Source: EconomicTimes

SREI to raise Rs 300 cr via tax-saving bonds in first tranche

SREI Infrastructure Finance has come out with a maiden issue of tax -saving bonds and would be looking to raise up to Rs 300 crore in the first tranche.

The company would be looking to raise a total of Rs 500 crore by the end of this financial year.

Although the issue opened on December 31, marketing of the issue started only today. “We had to open the issue in December-end due to technical reasons. The response should pick up now as people are back after new year,” a spokesperson of the company said.The yields are linked to the closing ones of government securities of comparable tenor.

The bonds issued are of 10 and 15 years maturity, carrying a coupon of 8.9 per cent and 9.15 per cent, respectively, both on an annual as well as cumulative basis. The bonds also have a buyback option after five years and have been rated AA by CARE.

Although the non-banking financial company can raise up to Rs 800 crore through tax-saving bonds this year, they have kept the upper limit lower than this. “The tax-saving bonds are newer and exclusively for retail investors. Hence, it takes many more subscriptions than that for normal bonds and tax-free bonds to match up to the issue size,” said Sanjeev K Sancheti, chief financial officer.

The issue closes on January 31. The bonds carry a lock-in period of five years, after which they can be traded on the Bombay Stock Exchange.

SREI has raised Rs 4,500 crore till now, against a target of Rs 7,000 crore for this financial year.

The company plans to borrow $15 million via external commercial borrowings this month. “We had raised $15 million during December- end and in the next 10 days or so will be taking overseas loans worth $ 15 million at a coupon of Libor+ 375 basis points,” Sancheti added.

Source: Business Standard

IDFC's Rs 4,400 cr infra bond issue soon

New Delhi: Infrastructure Development Finance Company (IDFC) today said it will raise Rs 4,400 crore through the issuance of a second tranche of tax-saving long term infrastructure bonds on January 11.

The second tranche of the bond issue would be open for subscription till February 25, IDFC said in a filing to the Bombay Stock Exchange.

In December, IDFC had mopped up Rs 538.08 crore from the a first tranche of tax-saving long-term infrastructure bonds.

The company plans to raise Rs 5,000 crore from infra bond issues this fiscal. The five-year bonds have a coupon of 9 per cent.

The NBFC had mopped up Rs 1,451 crore from over 7.3 lakh retail investors through the issue of long-term infrastructure bonds in FY'11.

Source: Financial Express

IDFC mops up Rs 533 cr from tax-saving infra bonds

Infrastructure Development Finance Company (IDFC) today said it had raised Rs 532.6 crore through an issue tax-saving infrastructure bonds.

The bonds have been alloted against 2.6 lakh applications, IDFC informed the BSE.

The first tranche opened for subscription on November 21 and closed on December 16. The company has plans to raise Rs 5,000 crore from the infra bonds issue this fiscal.

The five-year bonds carry a coupon rate of 9%.

Amount raised through the first tranche this fiscal is 14% higher than its equivalent in FY11, the company had said in a statement.

The NBFC firm had mopped up Rs 1,451 crore from over 7.3 lakh retail investors through the issue of long-term infrastructure bonds in FY11.

Source: Business Standard

NHAI plans electronic toll collection from next year

The National Highways Authority of India (NHAI), which is set to launch its first-ever tax-free public issue of secured redeemable non-convertible bonds (NCDs) on Wednesday, said it plans to roll out the electronic toll collection (ETC) system across the country in 2012.

New system

ETC will replace the existing cash-and-receipt tax payment system, Dr J.N. Singh, Member (Finance), NHAI, told reporters here on Tuesday. The vehicles' number-plates will be electronically-recorded and tax collected through a specially-created credit card for making such payments.

The tax thus collected would then be transferred to the account of the respective toll booths, he said. Currently, the people pay toll tax after an average of 60-70 km stretch of road. The ETC system, preliminary preparations for whose launch have been completed, is expected to make toll tax payment easier and faster as in the developed countries, Dr Singh said. Currently, India has 41 lakh km of roads, of which NHAI's share is 71,722 km. The State Highways are 1.66 lakh km long.

United Bank to issue 10-year bonds

United Bank of India will issue 10-year bond at a coupon rate of 9.20 per cent by the end of December this year in order to augment its Tier II capital. The bank has appointed IDFC Ltd as the arranger for its proposed Tier – II bond issue.

The bank plans to raise about Rs 100 crore through these non-convertible bonds. The bond issue will have green shoe options to raise additional Rs 100 crore on private placement basis, said a press statement issued by the bank.

United Bank's capital adequacy was at 12.95 per cent as on September 30, 2011

IIFCL shelves plans for bond issues

India Infrastructure Finance Company Ltd (IIFCL) has dropped plans to raise debt resources through tax-saving and tax-free bonds in the remaining months of the current fiscal.

Domestic fund raising plans through tax bonds have been shelved for now as the market conditions are very tough and also there are sufficient surplus funds with IIFCL, its Chairman and Managing Director, Mr S.K. Goel said.

“We have sufficient liquidity. That is why we are postponing our fund raising plans. We were earlier looking to mop up funds through both tax savings and tax free bonds. Our board has decided against this for the current fiscalm” Mr Goel said.

He also highlighted that the Government was really not interested in piling of cash in any of the institutions. “They are rather trying to squeeze out some liquidity from cash rich companies. Some cash may be drawn from us also.”

As IIFCL borrows funds on a long-term basis (average tenor of 10 years), Mr Goel felt that raising money at the current high interest rates may not be in the best interest of IIFCL.

“At today's rate if we tie-up funds for 10 years.... after two years, we may repent why we had taken money at this price. It may be better not to take funds now unless we very urgently require them”.

High interest rates

Both tax-free bonds (for corporates) and tax-saving bonds (for retail investors) today come at high interest rates, thanks to tightening of interest rates in the banking system, following successive 13 policy rate hikes by the Reserve Bank in the last 18 months.

Only the cash starved institutions may be compelled to go in for such high rates, Mr Goel said.

“Our aim is to provide loans to developers at concessional interest rates. It will not be in my interest to raise funds at such high rates”, he said.

Till date, IIFCL has sanctioned loans worth Rs 39,000 crore. Of this, the disbursement in the domestic market by this state-owned company is about Rs 19,000 crore.

Mr Goel said that IIFCL's London subsidiary has so far sanctioned loans worth $ 3.4 billion and disbursed about $ 800 million.

IIFCL is also yet to draw down the $1.195 billion line of credit made available to it by the World Bank.

NHAI to launch tax-free bonds

New Delhi: Unfazed by uncertainty in the capital markets, the National Highways Authority of India (NHAI) will launch its first ever tax-free bonds issue of Rs 10,000 crore on December 28.

The issue will close on December 30, a senior Road Transport Ministry official said.

The official further said the interest (coupon) rate of the bonds issue will be between 8 to 8.5 per cent, while refusing to disclose the exact number.

"A formal announcement will be made tomorrow by Road Transport Minister C P Joshi and you should wait for that," the official said, adding that the money raised from it will be used to partly finance various National Highways projects under different government schemes.

Some money will also be used for viability gap funding for BOT (build-operate-transfer) road contracts, the official added.

As per the prospectus filed by NHAI with the market regulator SEBI, the bonds will have two maturity periods of 10 and 15 years, and would get listed on the BSE and the National Stock Exchange.

In this year's Budget, the government had allowed NHAI to raise Rs 10,000 crore from the tax-free bonds, an instrument never used by it earlier. Till now, it used to raise funds through issue of 54EC bonds, under which subscribers can claim exemption of capital gains tax.

Citing the provisions of Income Tax rules, the NHAI prospectus has, however, clarified that only the interest earned on the new bonds will be tax-free, not the actual investments.

Moreover, investors will be liable to pay capital gains tax as applicable, it further said.

According to the NHAI prospectus, the bonds issue will worsen its debt to capital ratio from 0.11 to 0.29 if it raises Rs 10,000 crore from the markets. The debt to capital ratio reflects the financing strengths of a firm, higher the ratio, the more debt company has compared to its equity.

As on June 30, 2011, the NHAI's total debt (including secured loans) stood at Rs 6,636.21 crore.

The bond issue has got AAA (stable) rating from the three agencies -- Crisil, CARE and Fitch.

SBI Caps, ICICI Securities, Kotal Mahindra Capital and AK Capital Services have been appointed as the lead managers by the NHAI for the bonds issue.

Source: Financial Express

Srei Infra to raise Rs 500 cr via infra bonds

Kolkata: Srei Infrastructure Finance Ltd has decided to raise up to Rs 500 crore through a public issue of infrastructure bonds.

"The company board today approved the Rs 500 crore secured, non-convertible, redeemable infrastructure bond and the issue will hit the market by early January, 2012," said Srei Infra Chairman Hemant Kanoria.

Srei has not issued retail infrastructure bonds so far, though the tax-saving tool has been available for the last two years.

Srei officials declined to provide a figure on the rate of interest of the bond as it was not yet finalised and an application has not been filed with the market regulator.

However, they indicated the rate would not be higher than 9 per cent.

Srei officials said the company would tap the 30,000-odd client base of the group and its distribution network along with normal capital market distribution channels for the issue.

In the 2011-12 fiscal, IDFC was looking to raise Rs 5,000 crore in two or three tranches and L&T Infra hoped to raise Rs 1,100 crore from infrastructure bonds, which reportedly have not been receiving a very enthusiastic response.

Source: Financial Express

IDFC raises Rs 538 cr via infra bonds

Infrastructure Development Finance Company Ltd has raised a total of Rs 538.08 crore from approximately 2.7 lakh investors through the first tranche of its “Long Term Infrastructure Bonds”.

The company is looking to raise a total of Rs 5,000 crore by March 2012 through the infrastructure bonds, said a press release issued by the company.

The issue was open for subscription from November 21 to December 16. The face value of the bond is Rs 5,000. Investment up to Rs 20,000 is eligible for tax exemption under Section 80CCF.

IFCI Infra Bonds open

IFCI Infra bonds series IV is now open for subscription. If you are looking for safe avenues for investment which also gives good returns, grab this opportunity!

These bonds offer an interest rate of 9.09 per cent for a 10 year tenure and a slightly higher rate of 9.16 per cent for a 15 year tenor.

While investments in the former scheme would be bought back by the company at the end of the 5th or the 7th year, investors have the flexibility to exit the 15 year investment at the end of the 5th or the 10th year through a buy back.

What's more, these investments are also tax exempt up to an investment of Rs 20,000 under Sec 80CCF.

KFC bonds fully subscribed in five days

Kerala Financial Corporation’s (KFC) bond issue of Rs 100 crore has been fully subscribed within five working days from the date of opening of the issue.

The bonds were floated in the first week of December, said Mr Premnath Ravindranath, General Manager, KFC.

The corporation has since decided to exercise the green shoe option of retaining another Rs 100 crore to give an opportunity for even more investors to be a part of the State’s growth story.

The bonds are in the nature of debentures with unconditional, irrevocable guarantee of the State Government.

They are redeemable, non-convertible and taxable and is rated “A-(SO)” by Brickwork Rating Agency.

The face value of each bond will be Rs. 10 lakh with an annualised yield of 10.23 per cent. The maturity of the bond is 10 years.

However the investor will have the option to redeem the bond at the end of the fourth year at the rate of 25 per cent per year from fourth to seventh year.

The bonds will be listed on Bombay Stock Exchange (BSE). The issue closes on December 20.

The first such issue in six years, it has evoked good response from investors across the country,

Major investments have come in from Gujarat, Pune, Bangalore, Orissa, Jharkhand, Tamil Nadu and from within the home State.

It is one of the most healthy public sector enterprises of the State and the leading State Financial Corporation in the country.

The success of this issue is also an indicator of people’s faith in the improved fiscal performance of the Government, the professional management of KFC and its employees.

L&T Infra launches tax-free bonds; mulls ECB route for funds

Diversified conglomerate L&T’s infrastructure finance arm today said it is looking to broadbase fund sources and exploring external commercial borrowing (ECB) route even as the global markets remain weak.

L&T Infrastructure Finance has raised $90 million through the ECB window this fiscal and is aiming to raise more, Chairman and Managing Director of L&T Finance Holdings Mr Y M Deosthalee told reporters here. L&T Infrastructure Finance is a unit of the recently-listed L&T Finance Holdings.

L&T Finance Holdings President Mr N Sivaraman said the company has total headroom to raise up to Rs 600 crore.

Under the existing norms a dedicated infrastructure finance company like it can raise up to 50 per cent of its previous fiscal’s networth through ECB route, he said.

Mr Deosthalee conceded that international markets are in jittery at the moment but said the company will still scout for funds through the ECB route for reducing dependence on banks in a higher interest rate environment.

Up to 60 per cent of the firm’s funds are raised from banks at present while the rest comes from bonds subscribed by individuals and mutual funds.

Retail tax-saving bond issue

Meanwhile, the company also launched Rs 1,100-crore retail tax-saving bond issue with a coupon rate of 9 per cent.

The 10-year maturity bonds, which hit the market on November 25 and close December 24, can be traded on the bourses after a five-year lock-in and an individual can invest a maximum of Rs 20,000 to save income tax.

The company’s total loan book stood at Rs 8,790 crore with a 37 per cent exposure to the troubled power sector.

Stating that its entire exposure is to private sector projects, Mr Deosthalee said there is an “urgent need” to tackle issues on power generation front.

L&T Infra had raised Rs 656 crore through a similar issue last fiscal.

IDFC sees loan disbursements to grow only 15% this fiscal

Infrastructure Development Finance Company (IDFC) today said it is looking at just about 15% growth in loan disbursements in 2011-12, sharply down from the last fiscal, but expects to grow at a faster rate from next year.

"This fiscal, we expect our disbursements to increase by around 15%. In 2010-11, the growth was 50%," IDFC Executive Director Vikram Limaye told PTI on sidelines on a company event.

"However, with the government targeting infrastructure development in a major way during the coming 12th Five Year Plan (2012-17), we expect improvement from next fiscal onwards," he added.

It cited slowdown in the power sector as the major reason for dip in growth of disbursements.

"In the last 12 months, there has been a major slowdown in the power sector and it is likely to continue for another year. As power sector is our major area of financing, there is an impact on our overall outstanding disbursement also," Limaye said.

IDFC had an outstanding disbursement of Rs 41,823 crore in 2010-11, up from Rs 27,885 crore in 2009-10.

While 42-43% of total loan of IDFC is for the power sector, around 24% is for transportation and telecom sectors each.

"Hopefully, from the next fiscal onwards the growth rate will improve further. The government has fixed an ambitious target of $1 trillion investment in infrastructure during the 12th Plan and this should boost the sector," he said.

Limaye, however, said that uncertainties in policy decision, including issues like land acquisition, have to be addressed for faster development of infrastructure.

"There are areas like urban infrastructure, Railways, logistics and supply chain for agri-products and related fields where investments currently are very low. Besides, we are also focusing on road development," he said.

IDFC today also announced the public issue of its tax- saving long-term infrastructure bonds.

The bond issue is open for subscription from today till December 6 for retail investors, the company said.

It is the first tranche of bonds by the infra firm which aims at raising up to Rs 5,000 crore this fiscal.

In 2010, the company had received the IFC, or infra finance company, status within the NBFC category from the RBI.

The five-year issue carries a coupon of 9%.

Last fiscal, IDFC had raised Rs 1,451 crore from over 7.3 lakh retail investors.

IDFC had posted a net profit of Rs 524 crore for the September quarter, 55% up over the same period last year. Its total income rose 41% to Rs 1,715 crore in the same period.

Source: Business Standard

IDFC to raise about Rs 1,500 cr thru bonds

IDFC Ltd will offer 9 per cent interest on the first tranche of the tax-saving long-term infrastructure bonds.

The infrastructure finance company plans to raise a total of Rs 5,000 crore in the current financial year through retail bonds, in various tranches.

In the first tranche, the company hopes to raise about Rs 1,500 crore which is almost the same as it raised in the last financial year, said Mr Vikram Limaye, Executive Director, IDFC.

The issue is open for subscription from November 21 to December 16 or earlier. The face value of the bonds is Rs 5,000. Investment up to Rs 20,000 is eligible for tax exemption under Section 80CCF.

The bonds will carry a minimum lock-in period of five years from the date of allotment and can be redeemed after 10 years from the date of allotment. The minimum subscription is Rs 10,000 and in multiples of Rs 5,000 thereafter.

Investors can pledge these bonds to avail themselves of loans after the lock-in period. These bonds also have a buyback option at the end of five years.

These bonds are proposed to be listed on NSE and BSE. They have received the highest credit rating from rating agencies ICRA and Fitch.

Retail bonds are important for diversifying the borrowing mix of the company, Mr Limaye said.

Last year, the company had raised Rs 1,451 crore through the retail bonds from over 7.3 lakh retail investors.

Currently, bonds and debentures account for 63 per cent of the total borrowing mix. Foreign currency loans account for 8 per cent and short-term borrowing (commercial paper) account for 9 per cent of the total borrowing.

The company has been actively raising foreign currency loans since it was accorded the status of an infrastructure finance company last year, said Mr Sunil Kakar, Group Chief Financial Officer, IDFC.

priyan@thehindu.co.in

Hudco to relaunch tax-free bond with higher coupon rates

A tax-free bond Housing and Urban Development Corporation (Hudco) issued a fortnight ago has elicited poor response, prompting the government-owned entity to think of relaunching it with higher coupon rates.

According to market players, the collections — after the issue opened on September 29 — were just around Rs 10-20 crore in the first round that closed on Wednesday.

The urban infrastructure company had, after getting the approval from Central Board of Direct Taxes, offered tax-free bonds at coupon rates of 7.51 per cent for 10 years and 7.75 per cent for 15 years.

According to norms, the coupon rates are linked to the government bond’s closing yield at the end of the previous month.

The issue opened on a day when yields on the 10-year benchmark government bond jumped 9 basis points to settle at 8.44 per cent. “This implies that the issuances in October will offer higher coupon rates,” says a bond dealer with a domestic brokerage. “Hence investors have opted to wait.”

The 1970-incorporated Hudco on Wednesday said the aim was to raise Rs 100 crore in the first round. It is still optimistic.

“With better coupon rates in the second round, we are expecting better response,” said R K Khanna, the company’s executive director (resource mobilisation).

He declined to comment on the total amount raised in the first round. The company can raise up to Rs 5000 crore via sale of tax-free bonds this financial year.

Based on the annualised closing yield of September, the company will now offer 7.62 per cent for 10-year bonds and 7.83 per cent for 15-year bonds via private placement.

The coupon rates on tax-free bonds should not be less than 100 basis points lower than the annualised closing yield on government bond of previous month.

Source: Business Standard