Indian Railway Finance Corporation, Housing & Urban Development Corporation, Power Finance Corporation (PFC) and National Highways Authority of India (NHAI) will together raise R30,000 crore through tax-free bonds by end of January.
While NHAI and PFC will float bonds on December 28 to raise R10,000 crore and R5,000 crore respectively, IRFC and Hudco would follow them in January 2012, three persons familiar with the development told FE requesting anonymity.
The issues are part of a special window created by finance ministry to allow state-owned infrastructure entities raise cheap funds from the market. In 2011-12 budget, finance minister Pranab Mukherjee had also allowed major ports to borrow R5,000 crore from bond market but shipping ministry is not yet sure about which ports would raise the funds.
This is the first time the government has allowed its entities to raise funds through public issue of bonds that give subscribers tax exemption on interest income. In 2003, Reserve Bank of India had also issued tax-fee bonds of R20,395 crore but they were issued to some central public sector undertakings for one-time settlement of dues owed by state electricity boards.
NHAI and PFC, whose issues are rated AAA, will issue bonds in two series of 10 years and 15 years each offering interest rates of 8.2% and 8.3% respectively. ?Hudco will have to offer a higher rate as it has received a lower rating of AA+,? a senior official of one of the lead managers of these issues said.
Another official responsible for the issues said, ?IRFC has not done the basic ground work required for the issue as it wants to first test investors appetite for NHAI issue. It would also launch bonds in January?. IRFC and HUDCO seek to raise R10,000 crore and R5,000 crore respectively. NHAI bonds will be listed on Bombay Stock Exchange (BSE) and National Stock Exchange, while PFC will list its securities on BSE.
