The public issue of tax-free bonds by Indian Renewable Energy Development Agency (IREDA) received a reasonable response on Friday, with investors bidding close to three times the issue size, according to information provided by bond arrangers.
Against the size of Rs 1,716 crore, the issue attracted bids worth Rs 5,092.05 crore.
Qualified institutional buyers (QIB) displayed the maximum interest even as the category was subscribed more than six times the allotted quota of Rs 343.20 crore.
The corporates category came next where investors bid more than three times the allotted quota. This was followed by the HNI segment that bid more than twice the allotted size.
Retail individual investors showed comparatively lower interest although subscription stood at 1.84 times the allotted size of Rs 686.40 crore.
IREDA’s public issue of tax-free bonds are offering coupon rates of 7.53% on the 10-year paper, 7.74% on the 15-year paper and 7.68% on the 20-year paper for retail investors.
For other investor categories, bonds offer coupon rates of 7.28%, 7.49%, and 7.43% on the 10-, 15- and 20-year papers, respectively.
Tax-free bonds have made a comeback this fiscal after remaining absent in FY15 and seven companies have been permitted to raise a total of Rs 40,000 crore.
Tax-free bonds were introduced in 2011-12 with an overall limit of Rs 30,000 crore to boost infrastructure spending.
In 2012-13, the limit was doubled to Rs 60,000 crore. However, companies just raised Rs 18,000 crore through these bonds which was way below the target.
In the next financial year, the limit was kept at Rs 50,000 crore against which companies had borrowed R49,200 crore.