IIFCL Tax Free Bond Issue offers 7.90% returns

STATE-owned India Infrastructure Finance (IIFCL) on Monday said it plans to raise up to Rs 9,215 cr through tax-free bonds to fund infrastructure projects in the country.

 

"We plan to raise Rs 1,500 crore with greenshoe option up to the shelf limit of Rs 9,215 crore on firstcome first-serve basis," IIFCL chairman and managing director S K Goel said here.

 

"These funds will be utilised to provide longterm funding to PPP projects in the sectors like power and infrastructure," he said.

There will not be any tax implication at the time of investment in these bonds, while interest earned from the bonds is tax free.

Investors have an option to invest for 10 years, 15 years and 20 years and the bonds with no-lock in period would be listed at the BSE.

 

The minimum amount of application is Rs 5,000 with face value of Rs 1,000 per bond.

 

Giving details of the bonds, Goel said retail investors will get 50 basis points higher return compared with other categories like qualified institutional buyer (QIB), high net worth individuals (HNI) and companies.

 

For retail investors, the bonds carry a coupon rate of 7.69 per cent for 10 years, 7.86 per cent for 15 years and 7.90 per cent for 20 years, he said.

 

The coupon rate applicable for the other categories of investors shall be lower by 50 basis points 7.19 per cent for 10 years and 7.36 per cent for 15 years and 7.40 per cent for 20 years.

The issue will open on December 26 and closes on January 11.

As per the Budget proposal, IIFCL was allowed to raise Rs 10,000 crore from the tax-free bonds during 2012-13. Of this, it has raised Rs 785 crore from private placement.

 

Asked if IIFCL has requested government for allowing infrastructure financing institutions to raise funds through taxsaving bonds, he said, it is always our wishlist to get access to cheaper sources of funds. It is up to the government to allow or not.

 

IIFCL has set a target of Rs 30,000 crore loan disbursement for this financial year.

 

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