The National Highway Authority of India (NHAI) is set to hit the market in mid-January with its tax-free bonds issue.
The issue size will be about Rs 3,700 crore. In fiscal 2012, it had raised Rs 10,000 crore through tax-free bonds.
The coupon rate – which is the returns to investors – will be finalised later. The tenure of the bonds will be 10 years and 15 years.
NHAI recently raised about Rs 1,300 crore through private placement, at a cost of about 8.1 per cent. The bonds were for 10 and 15 years.
For the current fiscal, NHAI has got the Finance Ministry’s approval to raise Rs 5,000 crore through tax-free bonds.
The coupon rate for the latest issue will be linked to the yields on Government securities of similar tenure, as per norms specified by the Central Board of Direct Taxes.
The authority’s tax-free bond issue, by virtue of being AAA-rated, can offer a maximum return of 55 bps less than that offered by Government securities of similar tenure.
Simultaneously, NHAI is also in the market to raise up to Rs 4,000 crore through capital gains bonds. The issue, which offers 6 per cent returns for three years, is open till March 31. These investments insulate investors against benefits from long-term capital gains such as sale of property.
Till date, NHAI has raised about Rs 1,500-1,600 crore through capital gains bonds this year, according to sources.
NHAI, which oversees implementation of about 80,000 km highway network in the country, borrowed Rs 17,378 crore in fiscal 2012. This was a sharp increase over its borrowing in previous fiscals: Rs 6,800 crore in 2010-11, Rs 5,123 crore in 2009-10, Rs 5,590 crore in 2008-09.
Apart from market borrowings, NHAI’s source of funds include cess from sale of petrol and diesel and a percentage of toll revenue collected from road users.