Tax free bond of NHAI is offering an attractive yield of 8.75% per annum to retail investors for the tenure of 15 years while ECL NCD offers 12.52% in 5 years for all categories of investors.
Tax free bond of National Highway Authority of India (NHAI) and NCD of Edelweiss’s ECL Finance Limited are currently open and will close on February 05, 2014 and January 27, 2014 respectively.
NHAI has reserved 40% of the issue size for retail investors, 20% for HNIs, 30% for corporate and 10% for QIB whereas ECL has allocated 20% of overall issue size each for retail investors, institutional and non-institutional investors. Rest of 40% of NCD has been allocated for reserved individuals (company employees or shareholders).
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: Both issues have a face value of Rs 1000 but minimum application size varies as NHAI has a minimum application size of Rs 5,000 for five bonds while ECL has decided to keep it at Rs 10,000.
NHAI seeks to collect Rs 1000 crore through its tax free bonds with an option to retain an additional 2698.40 crore if the issue gets oversubscribed. Similarly, the NCD by ECL aims to aggregate Rs 250 crore and has a greenshoe option to retain another Rs 250 crore if the issue gets oversubscribed.
Credit Ratings: CRISIL, CARE and Brickwork have assigned a rating of AAA (Triple A) to tax free bond of NHAI. Such instruments carry very low credit risk and high degree of safety regarding timely servicing of financial obligations.
Also, CARA and Brickwork have assigned a rating of AA (Double A) to the NCD issue of ECL. Such issues give safety regarding timely servicing of financial obligations.
Tentative brokerage structure: The brokerage for NHAI’s issue ranges between 0.25% and 0.80% per application offered upfront whereas brokerage for ECL NCD ranges between 0.75% and 1.50% per application offered upfront based on tenure.
Effective Yield:
NHAI Tax Free Bonds
|
Category/Yield Tenure |
10 Years |
15 Years |
|
QIB |
8.27% |
8.50% |
|
Corporates |
8.27% |
8.50% |
|
HNIs |
8.27% |
8.50% |
|
Retail Investors |
8.52% |
8.75% |
ECL NCD Issue
|
Effective Yield of NCD holders/ Tenure |
36 months |
60 months |
|
For all investors |
12.24% |
12.52% |
|
Post tax returns for individuals falling under 10.30% tax bracket |
10.98% |
11.23% |
|
Post tax returns for individuals falling under 20.60% tax bracket |
9.72% |
9.94% |
|
Post tax returns for individuals falling under 30.90% tax bracket |
8.46% |
8.65% |
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 NHAI –SBI Trustee Company Limited and ECL- Axis Trustee Services Limited
Registrar: NHAI - Karvy Computershare and ECL - Link Intime India
