The base issue size is R500 crore with an option to retain an oversubscription of R500 crore. Nearly 40% of the issue will be held for retail investors. The issue is rated AAA by ratings agencies CARE, India Ratings and Icra. The issue is expected to open later this month.
State-owned infrastructure company IIFCL also plans to raise R7,000 crore via a public issue of tax-free bonds, in October, according to a senior official in the company.
The IIFCL executive said the coupon rate for retail customers will be 55 basis points (bps) below the weekly average yield of the ten year G-sec, in the week before the launch of the issue. For corporates and qualified institutional buyers the coupon rate will be 80 bps below the weekly average ten year G-sec bonds yield. The quota for retail investors is 40% of the size of the issue or R2,800 crore.
IIFCL had raised about R632 crore via private placement of tax-free bonds in August. It was offering its bonds in three tenures of 10 years at 7.75%, 15-years at 8.26% and 20-years at a coupon of 8.19%. The finance ministry has allowed IIFCL to raise R10,000 crore via tax-free bonds this fiscal.
Meanwhile, Hudcos tax-free bonds issue targetted to raise up to R4,809 crore, has seen about R1,943 crore being mopped up, according to BSE website. Hudcos bonds have a coupon rate of 8.14% for 10 years, 8.51% for 15 years and 8.49% for 20 years for corporates, qualified institutional buyers and high net worth individuals applying for bonds more than R10 lakh. Retail investors will get 25 basis points higher across all the tenures. The finance ministry has allowed Hudco to raise R5,000 crore through tax-free bonds, and the company raised R190 crore through private placements last month.
REC has already raised R3,500 crore through tax-free bonds. The issue was to close on September 16 but closed earlier as the limit of the issue had been reached. The government has allowed 13 public sector institutions to raise R48,000 crore through tax-free bonds in 2013-14 to meet their infrastructure investment needs. Power Finance Corporation is also expected to raise funds through tax-free bonds this month.