Prajna Capital - An Investment Guide

The finance ministry on Monday approved issue of bonds by railways worth Rs 5,000 crore for the financial year ending March 31, 2010. The bonds will be issued by Indian Railway Finance Corporation ( IRFC ), which will be tax-free, secured, redeemable and non-convertible, carrying an interest rate in the range of 6.5% to 7.25% per annum. The bonds will be available in the form of public issue. In another order, the government approved notification of 10 years zero-coupon Bhavishya Nirman Bonds of National Bank of Agriculture and Rural Development ( NABARD ), again to be issued in this financial year. The number of bonds approved for issue are 95,20,000 with maturity value of Rs 20,000, each having life period of 10 years. Income on such bonds will be taxed only on maturity as capital gain. IRFC bonds will create a good opportunity for investors in the high tax band. First of all, these are government-guaranteed bonds so there is no chance of default. In fact, in certain term, it is safe...

Corpn Plans To Raise 1,000 Crore, Bonds Offer Pre-Tax Yield Of 9.68% For 7 Years THE tax-free bonds of Indian Railway Finance Corporation (IRFC) received bids of over 300 crore on the very first day after it opened for subscription on Monday, according to distributors of the bonds. IRFC plans to raise 1,000 crore through the offering and could also consider an unspecified green shoe option through private placement. The bond issue will be open for subscription till December 3. The decent response to the issue comes amid tight liquidity conditions in the system, with banks borrowing over 1 lakh crore through the Liquidity Adjustment Facility ( LAF ) auctions. The pre-tax annualised yield works out to 9.68% for a seven-year tenor and 10.30% in 10-year tenor for banks and corporates at the tax rate of 33.66%. For individuals, the pre-tax annualised yield (tax rate of 30.90%) will work out to be 9.30% in the seven-year tenure and 9.89% in the 10-year tenure. It offers a premium over the ...