Money & Banking

IDFC expects to raise Rs 2,172 cr thru third tranche of tax-free bonds

Our Bureau Mumbai | Updated on February 24, 2011

Infrastructure Development Finance Company (IDFC) announced on Thursday the public issue of the third tranche of its tax-saving long-term infrastructure bonds.

The domestic infrastructure lender expects to raise up to Rs 2,172 crore through the issue which opens for subscription on February 28 and closes on March 16. IDFC, which invests about 80 per cent of its funds in the power sector, has already raised Rs 1,228 crore in the first two tranches of bonds this fiscal.

“The issue can be subscribed in a lot of two bonds of Rs 5,000 face value each. The bonds have a maturity of 10 years and offer a coupon of 8.25 per cent. They can be bought in both physical or demat form. We expect this issue to do well since most retail customers make investments in March for tax savings,” said Mr Sunil Kakar, Group Financial Officer.

IDFC said that the bonds will be issued in two series. Series 1 will carry an annual return of 8.25 per cent, while Series 2 will offer similar returns but with a cumulative option compounded annually. The issue has a lock-in period of five years, post which subscribers can sell the bonds. After five years, it will be listed on the BSE and NSE. The bonds have been benchmarked against the yield of 10-year Government securities, which was 8.31 per cent (annualised) on January 31, 2011.

With the first tranche of infrastructure bonds opening last November and the second early this month, over 6.3 lakh retail investors have already invested in these issues. IDFC has the authority to raise up to Rs 3,400 crore during the 2010-11 fiscal.

Published on February 24, 2011

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