Tax free bonds of IRFC and NHB offer yields up to 8.65% and 9.01% per annum respectively to retail investors.
Indian Railway Finance Corporation (IRFC) tax free secured redeemable non-convertible bonds (NCB) will open for subscription on January 6, 2014 and close on January 20, 2014 while the tax free bond of National Housing Bank (NHB) will be open from December 30, 2013 to January 31, 2014.
IRFC has reserved 40% NCBs for retail investors, 20% for HNIs, 30% for corporate and 10% for QIB whereas NHB has reserved 40% of overall issue size for retail investors, 25% to HNIs, 25% to domestic corporate and 10% for QIB.
Who can apply: Resident individuals, HUFs, partnership firms, companies and body corporates, banks, public financial institutions, national investment funds, mutual funds, venture capital, insurance companies, commercial banks, co-operative banks, public/private charitable trusts, industrial research organizations and other eligible categories.
Application size: The face value of IRFC and NHB bond is Rs 1000 and Rs 5000 respectively with the minimum application size for both issues being Rs 5000.
IRFC seeks to collect Rs 1,500 crore with an option to retain an additional 7,163 crore if the issue gets oversubscribed taking its total size to Rs 8663 crore. Similarly, the public issue by NHB aims to collect Rs 1,000 crore and has a greenshoe option to retain another Rs 1100 crore.
Credit Ratings: CRISIL, ICRA and CARE have assigned a rating of AAA (Triple AAA) to both. Such instruments carry very low credit risk and high degree of safety regarding timely servicing of financial obligations.
Tentative brokerage structure: The brokerage for IRFC’s issue ranges between 0.20% and 0.75% per application offered upfront whereas brokerage for NHB’s tax free bonds ranges between 0.20% and 0.85% per application offered upfront.
Effective Yield:
|
Company |
Maximum Effective Yield for Individual |
Maximum Effective Yield for Non-Individual |
|
IRFC |
10 years - 8.48% and 15 years - 8.65% |
10 years - 8.23% and 20 years - 8.40% |
|
NHB |
10 years- 8.51%, 15 years - 8.88% and 20 years - 9.01% |
10 years- 8.26%, 15 years - 8.63% and 20 years - 8.76% |
Who can sell the product: Registered stock brokers with any stock exchange along with their respective sub-brokers, banks and intermediaries selected by the issuing company.
How can an IFA register to sell the product: An IFA has to sign the sub-broker agreement with a stock broker to be eligible to sell the bonds.
Trustee: For IRFC - SBICAP Trust Company and for NHB - IL&FS Trust Company.
Registrar: For both IRFC and NHB- Karvy Computershare.
Listing: NHB’s tax free bond will be listed on NSE while IRFC’s issues will be listed on both BSE and NSE.
Depositories: NSDL and CDSL
Lead Managers:
For IRFC – SBI Capital Manager, AK Capital, Axis Capital, ICICI Securities and Kotak Investment Banking.
NHB - Axis Capital, Edelweiss Financial Services, RR Investors Capital.
