Bharat Bond ETF anchor book subscribed 1.7 times

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Updated: December 13, 2019 2:55:35 AM

The ETF has two series of different maturities. Edelweiss AMC said it is aiming to raise up to Rs 5,000 crore through the three-year maturity series and Rs 10,000 crore through the 10-year maturity series. Retail investors can invest in the ETF with as much as just Rs 1,000.

Bharat Bond, ETF, Bharat Bond Exchange Traded Fund, market news, NHAI, NTPC, Indian Railway Finance Corp, NLC India, Export, Import, Bank of IndiaThe ETF includes companies such as NHAI, NTPC, Indian Railway Finance Corp, NLC India and Export Import Bank of India, among others. It will only invest in AAA-rated bonds of PSUs.

The Bharat Bond Exchange Traded Fund (ETF), the country’s first corporate bond ETF, which will be a basket of bonds issued by central public sector undertakings (CPSUs), central public sector enterprises (CPSEs), central public financial institutions (CPFIs) or any other government organisation bonds, was launched on Thursday. Edelweiss Asset Management Company (AMC), which has the mandate to manage the ETF, indicated that the subscription will remain open till December 20. The anchor book of BharatBond ETF was subscribed 1.7 times amounting at Rs 2,980 crore.

The ETF has two series of different maturities. Edelweiss AMC said it is aiming to raise up to Rs 5,000 crore through the three-year maturity series and Rs 10,000 crore through the 10-year maturity series. Retail investors can invest in the ETF with as much as just Rs 1,000.

The ETF includes companies such as NHAI, NTPC, Indian Railway Finance Corp, NLC India and Export Import Bank of India, among others. It will only invest in AAA-rated bonds of PSUs. The expense ratio of the ETF stands at 0.0005%. Radhika Gupta, CEO, Edelweiss AMC, hinted that there would be more tranches for the Bharat Bond ETF. “We do hope to come back to the market with another tranche later this year. The CPSEs have committed not only to the fresh tranche but the re-issuances in existing tranches,” she said.

The Bharat Bond ETF was open for anchor investors on Thursday. The secretary, Department of Investment and Public Asset Management, tweeted that the Bharat Bond anchor issue had been subscribed 1.7 times of the base issue at Rs 2,980 crore. Sources told FE that the issue had been subscribed by public and private banks, foreign portfolio investors and insurance companies.

Last week, the CCEA approved the creation and launch of the ETF. An element of tax efficiency is also attached with the ETF as bond ETFs are taxed with the benefit of indexation, which significantly cuts tax on capital gains for investors. The ETF will track the underlying index on risk replication basis, i.e. matching credit quality and average maturity of the index. The ETF with three-year maturity will track the Bharat Bond Index- April 2023 and 10-year maturity will track Bharat Bond Index – April 2030.

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