Institutional investors and high networth individuals have lapped up National Housing Bank's (NHB) tax-free bonds issued on a private placement basis.

As against the issue size of Rs 900 crore including a green shoe option of Rs 800 crore, NHB has received demand for bonds worth Rs 1,050 crore, leading to an over-subscription of Rs 150 crore.

The tax-free bonds were issued for tenors of 10, 15 and 20 years.

The coupons offered for the bonds were 8.01 per cent, 8.46 per cent and 8.37 per cent respectively.

The Central Board of Direct Taxes (CBDT) had earlier this month permitted NHB to issue tax-free bonds for Rs 3,000 crore for 2013-14.

Of this amount, as much as 30 per cent was allowed to be issued under private placement.

With the private placement of bonds almost through, NHB is now likely to set its sight on the public issue of tax-free bonds.

(This article was published on August 30, 2013)
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