Sahil left a comment about IFCI coming out with another series of their Tier II bonds, and I was completely unaware about this. I searched a little more but couldn’t find anything other than the application form on the Bajaj Capital website.
I’m a bit surprised by that because usually these are easier to locate but this time the documents aren’t even present on the IFCI website.
From the application form I could gather that the issue has already opened on 5th September 2011, and will close on October 10th, 2011.
There are four options in all – two maturities, and a cumulative and annual interest payment option on each maturity option.
Here are the interest rate and other details for the four options.
| Option | I | II | III | IV |
| Face Value | 10,000 | 10,000 | 10,000 | 10,000 |
| Coupon Rate | 10.60% | 10.60% | 10.50% | 10.75% |
| Interest Payment | Cumulative | Annual | Annual | Annual |
| Duration | 10 years | 10 years | 10 years | 15 years |
| Eligibility | Retail under 5 lakhs | Retail under 5 lakhs | All eligible investors | All eligible investors |
| Call Option | At the end of 7 years | At the end of 7 years | At the end of 7 years | At the end of 10 years |
| Redemption Amount | 27,388 | 10,000 | 10,000 | 10,000 |
Like the earlier series, even these Tier II Series 3 NCDs will be unsecured, and will list on the BSE.
The last series that were issued by them also had some very similar features with the 7-year series giving a rate of 10.50%, and the 10-year series giving an interest rate of 10.75%.
I see that the listed NCD 10.5% series closed at Rs. 9,850 yesterday, and this series is quite similar to that one. So if you were interested in these bonds you could just buy the existing bonds from the market and avoid the hassle of waiting for the issue to close, and then get allotment.
And it might even make sense to wait and see what happens when these bonds list on the market and increase the supply – the price may go down even further.
And one last thing about IFCI itself – I’ve seen several people refer to it as a government company right from the time they issued the infrastructure bonds last year, but this is not true. The central or state government doesn’t own any stake in IFCI.
This is what the shareholding pattern looks like
| Mutual Funds / UTI | 1.07% |
| Financial Institutions / Banks | 13.89% |
| Insurance Companies | 14.39% |
| FIIs | 20.97% |
| Bodies Corporate | 10.70% |
| Individuals | 30.76% |
| Individuals holding more than Rs. 1 lakh | 7.12% |
| NRIs | 1.08% |
If I get the prospectus – I’ll go through it and see if there’s any more pertinent information there, and update the post then.
We are interested to buy long maturity IFCI (Part- A Series 52 to Part- J Series 52 ) Zero coupon bonds upto 10 crs.
PRAKASH
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Now muthoot gold group also out with the ncd with interest of 13 pc and more
Now muthoot gold group also out with the ncd with interest of 13 pc
Most Likely… I’m quite confident that the upcoming Infra Bond issues would carry 9% interest but I’m quite surprised that no such issue has hit the markets as yet. I hope at least one such issue comes in the next 7-10 days.
But the rising bond yields and rising inflation are quite worrisome for the Indian Economic Growth. I hope the Govt. starts working quite soon after a honeymoon period of two & a half years and the situation gets in control.
http://www.bseindia.com/bseplus/StockReach/AdvanceStockReach.aspx?scripcode=972691
not a single trade till now in these 10.75 ifci bonds. means retail investors have not entered in them. only big guys with aim of getting fixed interest have bought these bonds.
Shiv, some muthoot bonds – unrelated to gold group – are there with 13pc rate but they seem very risky. please keep us updated on any other safe bonds with attractive rate of interest.
Thanks again shiv. as i said you’re the best when we talk about fixed income instruments. one interesting news for same segment- 10 year govt bond yield today touched 9pc. lets hope some infra bond to come out with same rate soon.
Shiv is the best! If it hadn’t for him I’m sure I would have not written many of the bond related posts here.
hehe.. I’ve never received 2 such big compliments in a single day.. Thanks Manshu !! 🙂
I used to consider myself to be more of a stock market guy thats why I stepped into Broking, Mutual Funds & Financial Planning but I think the recent market crashes have made me “a Fixed Income guy” (read it as “a Convertible Bond”)… 😉
thanks shiv. you’re the best when it comes to bonds and their listing. any new fixed income instrument after religare bonds? pl keep updating. . 🙂
Hi Sahil… Thanks for the compliment !!… 🙂
Power Finance Corporation has come out with a Secured & Tax-Free NCDs Issue with a Coupon Rate of 8.09% (10 years) & 8.16% (15 years). The issue opened on Nov. 2nd, closes on Nov. 15th & the deemed date of allotment is Nov. 25th. The issue is rated ‘AAA’ by CRISIL and ‘AAA’ by ICRA. The Bonds are going to list on the NSE.
Effective Yields of the Issue are as follows:
8.09% Option >> 11.71% (30.9% Tax Bracket) >> 10.19% (20.6%) >> 9.02% (10.3%)
8.16% Option >> 11.81% (30.9% Tax Bracket) >> 10.28% (20.6%) >> 9.10% (10.3%)
I think the issue is most suited to people in the 30% tax bracket. People in the 20% tax bracket may also consider to invest but I think, for 20% tax bracket people, IFCI 10.75% Bonds were better than this issue. But then PFC is a Govt. backed Financial Institution.
Thanks for this info Shiv – I had read about this but didn’t see the prospectus or offer document yet. Sounds like a good topic for a post though.
On another note – did you get my email over the weekend?
Hi Manshu… Yes, I got the mail. Just replying to it.
No Trading on the listing day till 11:15 A.M., its been 2 hours since the market opening… 🙂
Sure Sahil I’ll do that.. & Happy Diwali to you & your family!!.. 🙂
any idea when this set of bonds would be listed?
Hi Sahil.. these bonds would list in the first week of November.
Thanks Shiv. the previous cumulative series bonds are still at discount. will be interesting to see the fresh listing. pl update the bse codes when you get. happy diwali
Hi
Listing of IFCI Tier II NCDs – Series 3 will happen tomorrow, November 3, 2011. The BSE Codes for the same are as follows:
Option 1 – 10.60% Cumulative Interest – 972688
Option 2 – 10.60% Annual Interest – 972689
Option 3 – 10.50% Annual Interest – 972690
Option 4 – 10.75% Annual Interest – 972691
Source:
http://www.bseindia.com/cirbrief/new_notice_detail.asp?noticeid={19E2F6BF-45A6-47CF-99B5-5ABDCF07A9A7}¬iceno=20111102-15&dt=11/2/2011&icount=15&totcount=15&flag=0
Thanks for the info Shiv – I had quite forgotten about the listing of these bonds. I need to email you about something else, will write to you today.
Sure.. Most Welcome !! 🙂
PFC is out with fresh set of infra bonds.
http://www.pfc.gov.in/WhatsNewDetail.aspx?wtsid=52
Sahil
Thanks Sahil! I have a post about them today as well.
is actually investing in ifci at this moment feasible.And a prcticle decission.
there will be better infra bonds in feb-march so better to wait.. hey manshu check out muthoot n6 bonds available around 940 on nse. if possible pl provide code for the same on bse
IFCI also launched infrastructure bonds (eligible for deduction u/s 80ccf upto 20k) @ 8.5% to 8.75%. Would also be worth analysing as a tax saving option
Thanks – I had covered all of them in quite a bit of detail last year, and will do so again this year. The one thing I wasn’t able to do last year was to create a good calendar of them, so I’m going to start with that this year.
Some info about IFCI(Industrial Finance Corporation of India) I found on net. Hope it helps.
1. The Supreme Court on Monday issued notice to the central government on a plea challenging the appointment of Atul Kumar Rai as the chief executive officer and managing director of Industrial Finance Corporation of India (IFCI) despite his alleged involvement in “serious corrupt practices”.
Appearing for CPIL, senior counsel Prashant Bhushan told the court that while huge amount of government money was going into IFCI, the institution was functioning without accountability.
Ref:http://articles.economictimes.indiatimes.com/2011-09-05/news/30115824_1_atul-kumar-rai-ifci-industrial-finance-corporation
2. By 2002, IFCI had accumulated huge losses which completely eroded its equity capital and reserves. To avoid any further crisis, in 2002-03, the government, in consultation with state-run banks and financial institutions, had worked out a restructuring package for IFCI, which included financial assistance of Rs5,220 crore to the entity over the period from 2003 to 2011-12. Under this package, the first tranche of Rs523 crore was provided as optional convertible debentures with a right to recompense at par and Rs2,409.30 as grants till 2006-07.
Ref:http://www.moneylife.in/article/8/3696.html
This is great info thanks a lot!
You rightly mentioned that last series of IFCI is trading at a discount to its face value. One can easily buy any one of the NCDs from the secondary market. This shows that there is not significant appetite for these issues and they drop after listing. So, its better to start being extra careful in investing in the NCDs now.
Hi.. Govt. has an “Indirect Control” over IFCI and in a way its considered as a PSU.. Govt. was also considering a stake sale of 26% a couple of years back but the plans were put on a backburner..
Indirect control how? through the stake they own through LIC etc? And how can they sell 26% stake when they don’t own any shares. Is there a link or something that explains this Shiv?
Hi Manshu.. GoI holds Rs 523 Crore zero-coupon, optionally-convertible debentures of IFCI and if converted, it would give the Govt. 42% direct stake in IFCI. Also LIC, GIC, IDBI Bank and PNB together own approximately 28% stake in IFCI.
Though IFCI has been given operational autonomy, the Govt. plays a key role in its affairs. An invitation and subsequent cancellation of 26% stake sale in 2007 clearly shows this role. Govt. has also appointed a nominee who sits on the IFCI board.
http://www.livemint.com/2009/09/08211215/Govt-asks-IFCI-to-rope-in-stra.html
http://smartinvestor.in/company/cNews-cnewsdet-37838-3148-IFCI_stock_falls_55_on_reports_of_equity_conversion-IFCI_Ltd.htm
Thanks for the links Shiv.
IFCI holding with central govt is in indirect form. Govt has optionally convertible debentures and they will convert them at right time.
Poor liquidity and no listing gain (as experienced in the august issue of similar coupon rate ifci bonds) so only long term investors are advised to apply for ifci bonds.
Is there a link on that Sahil – I don’t know about this and would like to learn how much can they eventually own if they do decide to convert their bonds. Thanks.
This seems quite a low coupon rate (10.5-10.75%) for a ‘A’ rated company (that too recently upgraded from A- !!!), whereas host of AA- rated companies came out with coupon rates between 12-12.5%.