After having issued tax-free bonds through the private placement route, NTPC is set to come out with its public issue of tax-free bonds worth Rs 700 crore next week.
NTPC will be the first out of the seven companies to come out with its public issue of tax-free bonds this fiscal year. The issue is set to open on September 23, bond arrangers said.
“The coupons on the 10, 15 and 20-year bonds for retail individual investors will be 7.36%, 7.53% and 7.62% respectively while for other categories that include, corporates, HNIs and QIBs, the coupons are at 7.11%, 7.28% and 7.37% respectively,” a bond arranger said.
A few weeks back, NTPC raised Rs 300 crore via tax-free bonds through the private placement route at a coupon rate of 7.15%. The company has been allotted a tax-free bond limit of R1,000 crore for the fiscal year 2016 out of which 70% has to be raised through public issue.
In the regular corporate bond market, Rural Electrification Corporation (REC) is looking to issue five-year bonds and is likely to come to the market on Monday, according to bond arrangers.
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 Rs 24,000 crore while HUDCO has been permitted to raise Rs 5,000 crore through tax-free bonds. IREDA has been allowed Rs 2,000 crore while PFC, REC and NTPC could raise Rs 1,000 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 Rs 60,000 crore. However, companies just raised Rs 18,000 crore through these bonds which was way below the target.
In FY14, the limit was kept at Rs 50,000 crore against which companies borrowed Rs 49,200 crore.