Comments
The Rural Electrification Corporation’s public issue of tax-free bonds (tranche-1) to raise Rs 1,000 crore with an option to retain oversubscription up to Rs 2,500 crore will open on Friday.
The issue consists of three series of bonds — 10, 15 and 20 years — carrying coupon rates of 8.01 per cent, 8.46 per cent and 8.37 per cent per annum, respectively.
However, retail investors, non-resident Indians on repatriation as well as non-repatriation basis and QFIs being an individual applying up to Rs 10 lakh, would get an additional 0.25 percentage points. The company has already received commitments for Rs 2,500 crore, said Rajeev Sharma, Chairman and Managing Director.
The secured, redeemable, non-convertible debentures (bonds) have a face value of Rs 1,000 each. The minimum subscription is for five bonds of Rs 1,000 each. The bonds will be listed on the BSE.
The issue will close on September 23 (with an option for early closure or extension, as may be decided by the Board of REC).
REC has earmarked Rs 1,500 crore of the shelf limit for sovereign wealth funds, pension and gratuity funds, which shall be raised through the private placement route.
Utilisation
The funds raised through this issue would be used for general lending operations of the company, other associated business objectives and to discharge existing debt obligations.
REC has been authorised to raise the bonds aggregating to Rs 5,000 crore in one or two more tranches in FY14. “We propose to raise Rs 37,000 crore this year,” Sharma said
The managers to the issue are A.K. Capital Services, Axis Capital, Edelweiss Financial Services and ICICI Securities.
The debenture trustee for the bondholders is SBICap Trustee Company.
Credit Rating agencies CRISIL, CARE, IRRPL and ICRA have rated the issue as having a “high degree of safety” regarding timely servicing of financial obligations.
Tax-free bonds differ from tax saving bonds. In tax-free bonds, interest income from the instrument is not taxed, while the investible amount does not form part of the total income in tax saving bonds. In tax-free bonds there is no upper limit.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.