State-owned India Infrastructure Financial Company (IIFCL) has raised about R500 crore in the first three days of the tax-free bonds issue having opened with public sector banks understood to have bought half this amount. The first tranche of the bonds is pegged at R1,500 crore.
Meanwhile, even after extending its tax-free bond for a week to December 27, Power Finance Corp?s (PFC) bond issue remained undersubscribed as the company raised just R709 crore. The state-owned power financing company was targetting R1,000 crore with a greenhouse option of R3,590 crore. PFC had said that most of the buyers were either high net individuals or retails investors and demand from qualified institutional buyers (QIBs) and banks had been weak leaving the issue undersubscribed.
IIFCL, however, has garnered healthy interest from public sector banks as it has a diversified portfolio and does not solely focus on the power sector, according to sources. By Friday, IIFCL had got about R250 crore from banks, R100 crore from retail customers, R60 crore from high-net worth individuals and R20 crore from corporates. According to a sources, Allahabad Bank and Bank of India have invested R100 crore each, while Union Bank invested R50 crore. Dena Bank and Oriental Bank of Commerce were also expected to buy these bonds on Friday. IIFCL is also trying to rope in IDBI Bank and Punjab National Bank, according to source.
?Most of the corporates and bank treasury heads are on leave so more investments will flow in from January 2 onwards,? said Harsh Kumar Bhanwala, the executive director of IIFCL. For the current tranche, the pre-tax yield for the highest tax bracket investors works out to 11.12%, 11.37% and 11.43% for 10 years, 15 years and 20 years, respectively.
Rural Electrification Corp (REC) raised R2,100 crore, twice its issue size, but the company was disappointed as it was less than half of R4,500 crore it intended to raise. IIFCL too is unlikely to be able to raise the total targetted amount of R10,715 crore.