The bonds will have a ceiling on the coupon rates based on the reference government security rate.
The reference government security rate would be the average of the base yield of G-Sec for equivalent maturity reported by Fixed Income Money Market and Derivative Association on a daily basis prevailing for two weeks ending the Friday immediately preceding the filing of the final prospectus with the stock exchange, or the Registrar of Companies in case of public issue and the issue opening date in case of private placements.
Bonds issued by India Infrastructure Finance Company (IIFCL) will have a tenure of 10, 15 and 20 years. For other companies, the tenure of the bonds will be for 10 and 15 years.
Retail individual investors, qualified institutional buyers, corporates and high net-worth investors can invest in the tax-free bonds in varying proportion. A finance ministry notification says that the ceiling coupon rate for AA rated issuers will be the reference G-Sec rate, less 50 basis points in case of retail individual investors and reference G-Sec rate, less 100 basis points in case of other investor segments like qualified institutional buyers, corporate and high net-worth individuals.
The notification has clarified that retail investors would be individual investors, Hindu Undivided Family (through
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