Three companies - Indian Renewable Energy Development Agency (IREDA), India Infrastructure Finance Company Limited (IIFCL) and Ennore Port Limited (EPL) have come out with their tax free bonds.
All the issues are open for subscription currently. IREDA issue will close on March 10, 2014 while the IIFCL and EPL will both close on March 14, 2014.
While IREDA and IIFCL are offering an effective tax free yield up to 8.80% per annum to retail investors for 15 and 20 year tenure, EPL has announced an attractive tax free coupon rate of 9% per annum to individual investors for similar tenure.
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: All issues have a face value of Rs 1000 with minimum investment of Rs 5000 for five bonds.
Greenshoe option: IREDA seeks to collect Rs 500 crore with an option to retain an additional Rs 500 crore if the issue gets oversubscribed. Similarly, the public issue by IIFCL aims to aggregate Rs 750 crore and has a greenshoe option to retain another Rs 2823 crore if the issue gets oversubscribed.
EPL also aims to collect Rs 250 crore with an option to retain another Rs 250 crore if the issue gets oversubscribed. The maximum size of issue will be Rs 500 crore.
Allocation: IREDA and EPL have allocated 40% of tax free bonds for retail investors, 10% for QIB, 20% for corporates and 30% for HNIs. IIFCL has assigned 40% of issues for retail investors, 15% for QIB, 20% for corporates and 25% for HNIs.
Credit Ratings: CARE and Brickwork have assigned a rating of AAA (Triple A) to tax free bond of IREDA. Also, ICRA, CARE, India Ratings and Research and Brickwork have assigned a rating of AAA (Triple A) to the tax free issue of IIFCL.Such instruments carry very low credit risk and high degree of safety regarding timely servicing of financial obligations.
Meanwhile, ICRA and Care have rated AA (double A) to tax free issue of EPL. Such issues give safety regarding timely servicing of financial obligations.
Tentative brokerage structure: The brokerage for IREDA, IIFCLand EPL issue ranges between 0.20% and 0.85% per application offered upfront based on tenure.
Effective Yield:
|
Company |
For individual investors |
For non-individual investors |
|
IREDA |
10 years - 8.41%, 15 years and 20 years - 8.80% |
10 years - 8.16%, 15 years and 20 years - 8.55% |
|
IIFCL |
10 years - 8.41%, 15 years and 20 years - 8.80% |
10 years - 8.16%, 15 years and 20 years - 8.55% |
|
EPL |
10 years - 8.61%, 15 years and 20 years - 9.00% |
10 years - 8.36%, 15 years and 20 years - 8.75% |
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 IREDA - SBICAP Trust Company, IIFCL - IL&FS Trust Company and EPL- GDA Trusteeship.
Registrar: For IREDA – Link Intime, IIFCL - Karvy Computershare and EPL - Link Intime India
Listing: Both EPL and IIFCL tax free bond will be listed on BSE while IREDA issues will be listed on both BSE and NSE.
Depositories: NSDL and CDSL
Lead Managers:
For IREDA – Karvy Investment Banking, AK Capital and RR Investors.
IIFCL–SBI Capital Market, AK Capital Services, Axis Capital, ICICI Securities, Karvy Investment Banking and RR Capital Services.
EPL–AK Capital, RR Investors Capital Services and Karvy Investor Services.
