Housing and Urban Development Corporation Ltd. (HUDCO) is coming out with a tax-free bonds issue to raise resources. The bonds with a face value of Rs.1,000 each are in the nature of secured, redeemable, non-convertible debentures. The company intends to raise up to Rs.750 crore with an option to retain oversubscription of up to Rs.5,000 crore.
The minimum subscription is five bonds across all series and in multiples of one bond thereafter. The issue will open on January 9 and close on January 22.
The bonds have been assigned credit rating of ‘CARE AA+’ by CARE and ‘IND AA+’ by India Ratings and Research Private Limited (IRRPL), indicating high degree of safety regarding timely servicing of financial obligations and carrying low credit risk.
The company intends to utilise the issue proceeds for lending purposes, working capital requirements, augmenting the resource base of the company and for other operational requirements.
HUDCO is offering 15 basis points more than other issuers which have recently launched their tax-free bonds, Chairman and Managing Director V. P. Baligar told reporters here, adding, “for the first time ever, non-resident Indians and foreign institutional investors will be able to participate in the issue.”
Last year, the company mobilised Rs.5,000 crore and managed to utilise all the funds, he said.
The coupon rate for qualified institutional buyers (QIB), corporates and high-net worth individuals has been fixed at 7.51 per cent per annum for 15 years and 7.34 per cent for 10 years. For retail investors, the coupon rate is 7.84 per cent for 10 years and 8.01 per cent for 15 years.
The bonds will be listed on the National Stock Exchange .