At least four public sector infrastructure finance companies that issued their second tranche of tax-free bonds last month are planning to extend the sale of the issue after getting dull response, according to merchant bankers.

Power Finance Co (PFC), Housing and Urban Development Corp (Hudco), Rural Electrification Corp (REC) and India Infrastructure Finance Company (IIFCL) will be extending the sale of their bonds to March 20 from March 15. Merchant bankers said the companies could also extend the sale to March 31 if the allotment of the bonds were allowed to be extended into the beginning of next financial year by Sebi.

So far, in the second tranche, PFC had raised R106 crore, after setting a target to raise R3,890 crore and Hudco, which aims to raise R2,805 crore, has raised R95 crore. Meanwhile, REC has raised R61 crore ? way below its target of R2,482 crore ? and IIFCL has raised just about R68 crore, even as it aims to raise R6,331 crore. Indian Railway Finance Corporation (IRFC), which has raised about R290 crore so far, through these bonds, had extended its sale period by two days to March 15. The company was able to raise the highest sum so far as Union Bank of India invested R200 crore, while Vijaya Bank invested R15 crore, sources said. However, IRFC had a target to raise R3,513 crore, but with just two more days left before the close of the issue the company does not expect to get close to its target amount. Besides IRFC, other issues have a majority of retail and high-net worth indivuduals investors. In the first tranche these companies had raised about R13,255 crore, out of the R32,150 crore they set out to raise.

Merchant bankers said even after extending the date, companies may not be able to raise close their target as demand for tax-free bonds were low this year on to low coupon offered. Currently, there are nine companies that are looking to raise R26,300 crore by March 15 through tax-free bonds issue and are offering a coupon of 6.86%-7.08% and 7.02%-7.19% for 10 years and 15 years, respectively. The tax-free bonds issued between December 2012 and February 2013 by five companies had a coupon of 7.19%-7.34% for 10 years and 7.36%-7.51% for 15 years.

Miles to go

* PFC, Hudco, REC and IIFCL will extend sale of their bonds to March 20 from March 15

* In second tranche, PFC had raised R106 crore, after setting a target R3,890 crore

* So far, Hudco, which aims to raise R2,805 crore, has raised only R95 crore

* REC has raised R61 crore, way below target of R2,482 crore and IIFCL has raised R68 crore