Two state-owned companies, Indian Renewable Energy Development Agency (Ireda) and Housing and Urban Development Corporation (Hudco) are planning to raise a total of R1,949 crore by placing out tax-free bonds to institutional investors on Tuesday, according to information provided by bond market sources.
“Ireda plans to raise up to R600 crore while Hudco aims to raise R1,349 crore through a private placement of tax-free bonds— both with a maturity of 10 years,” a source said adding that bidding will be held on Tuesday.
Ireda was allotted a total limit of R2,000 crore of which 70% has to be raised through a public issue of debt while the rest—in this case R600 crore—could be raised through the private-placement route, according to a government notification.
Most other companies that have been permitted to issue tax-free bonds this fiscal have already tapped the private-placement route at least once so far and are now approaching the market with their public issues. In the case of Hudco, the company had reportedly raised R151 crore a few weeks back through the private-placement route according to bond arrangers close to the development. It had been allotted a limit of R5,000 crore on tax-free bonds out of which R1,500 crore could be raised through the private placement route.
For this fiscal year, seven companies have been allotted a total limit of R40,000 crore to be raised through tax-free bonds. NHAI has been given the largest allotment at R24,000 crore while Hudco has been permitted to raise R5,000 crore through tax-free bonds. Ireda has been allowed R 2,000 crore while PFC, REC and NTPC could raise R1,000 crore each. Tax-free bonds had made a comeback this fiscal after remaining absent in FY15. They were introduced in 2011-12 with an overall limit of R30,000 crore to boost infrastructure spending.
In 2012-13, the limit was doubled to R60,000 crore. However, companies just raised R18,000 crore through these bonds which was way below the target. In FY14, the limit was kept at R50,000 crore against which companies borrowed R49,200 crore.