The Hindu Business Line : ICICI Bank, IDBI launch tax-saving bonds

While IDBI bonds will be open for subscription from March 21 to March 29, ICICI Bank bonds will be open for subscription from March 26 to March 31. Most salaried employees look for investment avenues in order to save tax on account of year-end. The banks are issuing these bonds in order to target these investments, said an analyst.

ICICI Bank's bonds are available in three types - tax saving bond, regular income bond and children growth bond. NRIs are also eligible to invest in these bonds on both repatriable and non-repatriable basis.

The tax saving bond has two options, both at an issue price of Rs 5,000 and a redemption period of five years. In the first option, the face value is Rs 5,000 and the interest is 5.8 per cent per annum. The second one is a deep discount bond with a face value of Rs 6,630 and a yield to maturity of 5.8 per cent. The regular income bond is of three kinds, each with an issue price and face value of Rs 5,000. The redemption period and interest rates vary.

For a redemption period of five years, the interest rate is 6.75 per cent.

For seven years, the interest rate is 7 per cent.

These bonds have received `LAAA' ratings from ICRA and `AAA' from CARE.

IDBI is coming out with the second tranche of IDBI Flexibonds-23 with an earliest closing option on March 24.

Flexibonds-23 has a target of Rs 400 crore with a greenshoe option to retain an additional amount of Rs 411.64 crore.

The minimum investment in the IDBI Flexibonds 23 bonds is Rs 5,000. Investors can choose from two options: an annual interest option and a cumulative option.

The annual interest option offers 5.8 per cent interest, payable annually for five years.

Under the cumulative option, Rs 5,000 becomes Rs 6,630 after five years (YTM 5.80 per cent).

IDBI Flexibonds-23 have been rated `AA+ (stable)' by Crisil, AA+ (ind) (Outlook on rating is stable) by Fitch Ratings and `LAA +' by ICRA.

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