IREDA tax-free bonds fly: 52% sold within 40 mins
NEW DELHI: The Rs 1,000 crore tax-free bond issue of Indian Renewable Energy Development Agency (IREDA), the first issue of Calendar 2016, sold like hot cakes as soon as it opened for subscription on Friday morning.
Data available on the BSE website showed that the issue has received bids for 52.33 crore bonds, or nearly 52 per cent of the 1 crore paper up for sale, within the first 40 minutes of listing.
The breakup of the bids was not available at the time of writing this report. The bond offers between 7.28 per cent and 7.68 per cent for tenures ranging from 10 to 20 years compared with 7.60 per cent offered on the NHPC issue last month.
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There is a 20 per cent quota limit for qualified institutional buyers (QIBs), corporate and individuals and HUFs subscribing to bonds worth over Rs 10 lakh. These investors come under Categories I, II and III, respectively.
The rest 40 per cent of the issue will be offered to retail investors, who include individuals and HUFs bidding for bonds worth up to Rs 10 lakh. This set of investors comes under Category IV.
While the Mini-Ratna company is looking to raise Rs 1,000 crore from the issue, it may consider retaining oversubscription of up to Rs 716 crore, aggregating to Rs 1,716 crore, the company said.
In such a case, the allocation will be made on a proportional basis. The total offering to retail investors, in this case, will increase from Rs 400 crore to Rs 686.40 crore.
QIBs, companies and HNI investors (Categories I, II and III) are being offered 7.28 per cent return over a tenure of 10 years. Retail investors (Category IV) would be offered 7.53 per cent for the same maturity.
On bonds maturing over 15 years, retail investors would get 7.74 per cent return, while the rest three categories would get 7.49 per cent.
The 20-year bonds would offer a return of 7.68 per cent to retail investors, while the other three categories will get 7.43 per cent. Each bond is valued at Rs 1,000 and investors have to bid for a minimum of five bonds. The issue will close for subscription on January 22.
Tax-free bond issues of public sector companies have witnessed huge interest among both retail and non-retail investors in recent times. Just like bank fixed deposits (FDs), tax-free bonds offer fixed interest to subscribers.
While bank FDs attract income-tax as per the standard tax slabs (10 per cent, 20 per cent and 30 per cent), tax-free bonds allow income-tax exemptions on long-term investment gains. Both bank FDs, tax-free bonds offer fixed interest to subscribers.
Read full article: Economic Times
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