Tax Free Bonds Launching Shortly - Personal Finance 2.01

The notification for the tax free bonds for FY2012-13 has been released by the Ministry of Finance on 6/11/2012.

The Government has decided to allow select companies to issue tax-free bonds in the rest of the financial year. The notification mentions that a total of Rs 53.5 thousand crore be raised through issue of tax-free infrastructure bonds in the current financial year that ends in March.

The first issues to hit would be IIFCL , PFC and REC.?The yield for the investors pre tax and post tax is expected to be 7.67%, 8.55% (@10.3%?tax bracket), 9.66% (@20.6%?tax bracket)& 11.1% (@30.9% tax bracket) for AAA/AA+ rated bonds

The list of such companies are as under:

1. National Highway Authority of India (NHAI) : Rs 10000 crore
2. Indian Railway Finance Corporation (IRFC): Rs 10000 crore
3. India Infrastructure Finance Company Limited (IIFCL): Rs 10000 crore
4. Housing and Urban Development Corporation (HUDCO): Rs 5000 crore
5. National Housing Bank (NHB)?:?Rs 5000 crore
6. Power Finance Corporation (PFC)?:?Rs 5000 crore
7. Rural Electrification Corporation (REC)?:?Rs 5000 crore
8. Jawaharlal Nehru Port Trust?:?Rs 2000 crore
9. Dredging Corporation of India?:?Rs 500 crore
10. Ennore Port Limited:?Rs 1000 crore

Minimum 75% of the aggregate amount of allotted bonds are to be issued through public issue. 40% of the issue shall be earmarked for retail investors. When issuing through private placement

? the issuer shall adopt a book building approach and seek bids on coupon.

? No limit of number of arrangers

? Maximum size of 500 Cr. by each tranche

Coupon and Issue expenses Reference G Sec (RRate): Average of base yield of Government Security for equivalent maturity reported by FIMMDA prevailing for two weeks ending on Friday immediately preceding the filing of final prospectus.

The yield for the investors pre tax and post tax is expected to be 7.67%, 8.55% (@10.3% tax bracket), 9.66% (@20.6% tax bracket)& 11.1% (@30.9% tax bracket) for AAA/AA+ rated bonds

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Source: http://personalfinance201.com/Review-of-Products/tax-free-infrastucture-bonds-india.html

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