The public issue of the National Bank for Agriculture and Rural Development’s (NABARD) tax-free bonds, which closes on March 14, is seeing good response from investors.
According to a statement issued by the government agency, the retail portion has been subscribed 0.88 times and that reserved for institutional entities has been subscribed 10.72 times till Saturday.
NABARD has announced the public issue of tax-free, secured, redeemable, non-convertible bonds with face value of Rs 1,000 each for an aggregate amount of Rs 3,500 crore. The bonds also prove tax benefits under Section 10 (15) (iv) (h) of the Income Tax Act, 1961.
Nearly 60 per cent of the issue size is reserved for resident Indian individuals and the Hindu Undivided Family has been subscribed 0.88 times with 1.85 crore bids received as against 2.10 crore bonds offered. Further, 15 per cent of the issue reserved for qualified institutional buyers has subscribed by 10.72 times with 5.63 crore bids received as against 52.50 lakh bonds offered.
The portions reserved for corporates and high net worth individuals have been subscribed 10.09 times and 4.08 times respectively. The interest on bonds that will be listed on BSE will be exempt from levy of income tax in the hands of the bondholders and allotment would be done on first-come-first-served basis.
NABARD is offering bonds with options of 10 years and 15 years. The coupon rates under the 10-year option range between 7.04 per cent and 7.29 per cent per annum, depending on the category of investors.
The coupon rates under the 15-year option are 7.64 per cent per annum and 7.35 per cent per annum, and the interest will be paid on an annual basis.
The bonds proposed to be issued have been assigned a rating of ‘CRISIL AAA / Stable’ by CRISIL and ‘IND ‘AAA’ / Stable’ India Ratings. The instruments with these ratings are considered to have the highest degree of safety regarding timely servicing of financial obligations, said the statement.
The proceeds of the issue will be primarily utilised for direct lending to certain irrigation projects in India and refinancing irrigation projects.
