Amidst questions over their continued attractiveness despite falling returns, state owned India Infrastructure Finance Company Ltd (IIFCL) on Monday announced plans to raise as much as Rs 9,215 crore through tax-free bonds.
“We plan to raise Rs 1,500 crore with green-shoe option up to the shelf limit of Rs 9,215 crore on first-come first-serve basis,” IIFCL chairman and managing director SK Goel said, adding that the funds would be used for to provide long-term financing to PPP projects in the sectors like power and other infrastructure sectors. The issue will open on December 26 and closes on January 11.
The bonds give an additional edge to retail investors and offers a coupon rate of 7.69 per cent for 10 years, 7.86 per cent for 15 years and 7.90 per cent for 20 years.
But for other investors – QIBs, HNIs and corporates — the coupon rate is 50 basis points lower than that offered to retail investors. Accordingly, it will offer returns of 7.19 per cent for 10 years, 7.36 per cent for 15 years and 7.40 per cent for 20 years to these investors.
There will not be any tax implication at the time of investment in these bonds and interest earned is also tax free. Investors can invest for 10 years, 15 years and 20 years and the bonds with no-lock in period would be BSE listed. The minimum amount of application is Rs 5,000 with face value of Rs 1,000 per bond.
But despite the tax-free status, such bond shave found few takers this fiscal partly due to the low returns and partly due to a slew of such issues in the past one month.