National Highways Authority of India (NHAI) will launch its first ever tax-free bonds issue of Rs 10,000 crore on December 28. The bonds would be issued under Section 54EC bonds category.
The issue opens on 28th December 2011 and closes on January 11th 2012.
Details about the bond:
| Options | Series 1 | Series 2 |
| Face value | Rs. 1000/- | Rs. 1000/- |
| Coupon | 8.20 % | 8.30 % |
| Term | 10 years | 15 Years |
| Interest Payment | Annual | Annual |
- The bonds would be listed on BSE & NSE.
- Minimum investment of Rs. 50,000/- (i.e. 50 bonds)
Where will the money go?
The money raised from it will be used to partly finance various National 
Highways projects under different government schemes. Some money will also be used for viability gap funding for BOT (build-operate-transfer) road contracts.
Taxation:
The interest earned on the new bonds will be tax-free, not the actual investments. Investors will be liable to pay capital gains tax as applicable.
Credit rating:
The bond issue has got AAA (stable) rating from the three agencies — Crisil, CARE and Fitch.
SBI Caps, ICICI Securities, Kotal Mahindra Capital and AK Capital Services are the lead managers for the NHAI bonds issue.
Investologic Review:
- The company has made losses earlier and has got a higher credit rating of AAA mainly because it won’t default as it comes form GOI.
- Many banks are currently offering 9.5 – 10 % interest rates on FD, Infra bonds are offering 9.2% (odd) coupon and Muthoot Finance NCD is almost providing one with 13% interest rate, so NHAI bonds are best for the people who come under 30% tax bracket. Blocking 50,000 Rs. won’t harm them a big time.
Have some thoughts or inputs to add? Comment!
{ 5 comments… read them below or add one }
Nice review..
Even I still wonder when the company has made losses earlier so why it has got higher credit rating of AAA?
And minimum investment of 50k is very high.
Glad you liked it!
Well it’s from GOI so the rating is good.
And if you feel 50K is a big aount here is PFC Tax Free Bond you can look into it!
Can anybody tell me is this bond is correct for investment..? is it risky?
It’s a good one. Well it’s not very risky as it comes from Government of India.
You may also check out PFC tax Free Bond
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