The National Bank for Agriculture and Rural Development (Nabard) and the National Highways Authority of India (NHAI) are planning to come out with their tax-free bond issues in a few days time, according to bond market sources.
Nabard is planning to raise up to Rs 1,500 crore through tax-free bonds via the private placement route, bond market participants said.
This would be the first tax-free bond issue by Nabard in this fiscal year as the company was not in the original list of firms which were permitted to issue this instrument for FY16. Nabard has been recently allotted R5,000 crore of tax-free bond limit this fiscal, bond market sources had indicated.
The company is offering bonds having tenures of 10 and 15 years at coupon rates of 7.07% and 7.39% respectively, market participants said adding that the issue is set to open on Tuesday.
NHAI is also looking to raise up to Rs 3,300 crore via public issue of its tax-free bonds, according to bond market participants who pointed out that the issue is set to open on February 24. The company is offering bonds having tenures of 10 and 15 years.
For the 10-year paper, NHAI is offering a coupon rate of 7.29% for retail investors and 7.04% for all other categories.
For the 15-year paper, the company is offering a coupon rate of 7.69% for retail investors and 7.39% for other categories.
A few months back, NHAI’s public issue of tax-free bonds had received a considerable response with investors bidding more than twice the issue size of Rs 10,000 crore.
Tax-free bonds had 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 FY14, the limit was kept at Rs 50,000 crore against which companies borrowed Rs 49,200 crore.