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The National Highways Authority of India has decided to launch its first ever tax-free bonds issue of Rs 5,000 crore on December 28, with a face value of Rs 1,000 each.
The Highways authority plans to raise Rs 10,000 crore through the issue, which will remain open till January 11, 2012.
These bonds will have a tenure of 10 years and 15 years, respectively. The 10-year bonds will give 8.2 per cent interest annually, while the 15-year bonds would offer 8.3 per cent interest.
The interest would be payable annually on October 1 of each year. The bonds are proposed to be listed on the BSE and NSE.
Safe investment option
The Minister of Road Transport and Highways, Mr C.P Joshi, said: “These bonds are being offered across three categories of retail investors, high networth investors and institutional investors.
Thirty per cent of the bonds would be for those who want to invest Rs 5 lakh and below, another 30 per cent for those who want to invest Rs 5 lakh and above and the remaining 40 per cent for institutional investors.” The issue comes with an option to close earlier or extend up to a maximum period of 30 days at the discretion of the board of NHAI, subject to necessary approvals. However, the issue shall remain open for a minimum of three days.
“Apart from being a safe investment option, the interest earned on these bonds would not be taxed and there would be no holding period restrictions as well. The funds realised would be utilised for part financing of the various NHAI projects,” he added.
According to Mr Gajendra Haldea, Advisor to the Deputy Chairman, Planning Commission, infrastructure investment has risen sharply in India and much of the incremental push has come from the private sector.
“Investment in infrastructure has more than doubled in the five-year period to $470-480 billion from $230 billion.
“We see this figure rising to $1 trillion according to the 12{+t}{+h} Plan projection and 50 per cent of the total investment would come from the private sector. To achieve this, the sources of finance need to increase and the bond market will play an important role.”
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