The latest infrastructure bonds to come out are from L&T and like the bonds from IDFC they too carry a 9% interest rate.
The term of maturity is 10 years with a buyback after 5 years, and you can either take the option of the monthly interest or cumulative sum at the time of maturity.
The issue opens at November 25, 2011 and will close at December 24 2011, so there is quite a bit of overlap between this and the IDFC issue.
The issue has been rated ICRA AA+ and CARE AA+ and here are some other details.
| Series |
1 |
2 |
| Interest Rate |
9% |
Cumulative but effectively 9% |
| Maturity Period |
10 years |
10 years |
| Buyback Option |
5 years |
5 years |
| Buyback Amount |
1,000 |
1538.62 |
| Maturity Amount |
1,000 |
2367.36 |
The face value of these bonds is Rs. 1,000 and they will list on the BSE after the lock in period.
Let me look at a few new questions that have come up about these infrastructure bonds since the last post.
The first question was about the tax on the cumulative option and Shiv clarified that the tax on the cumulative option will also be treated the same way as interest is treated and will not be treated as capital gains.
The second question was about volatility in the bond prices when they list in the stock exchange, and you don’t have to worry about that volatility if you choose to exercise the buyback option and sell it back to the company. When you sell it back to the company using the buyback option you will get the principal back and the volatility in the market won’t affect you.
Then, a few of you asked if it’s better to wait for other issues, and if you are waiting just for the extra interest rate then that’s not likely to be much – maybe 0.25% or so higher on 20,000 and that doesn’t amount to much really. In my opinion it is better to choose one of the options that are available before this year ends, and get this over with.
You can look at the 80CCF infrastructure bond FAQ if you have any more questions, and here is a post with the 2011 infrastructure bond calendar that shows the bonds that are presently open for issue. And of course, you’re always welcome to post a comment.
Also, much thanks to Shiv who informed me about this bond issue (like the other ones).
I have purchased L&T infrastructure bonds 2011 B Series under polio number 20730838. I want redeem the bonds as early as possible. so I kindly request you to please instruct me when I can redeem the bonds and which buy back applicatin for I have to down load.
Thanking you in anticipation.
With regards
I have purchased L&T infrastructure bonds 2011 B Series under polio number 20730838. I want redeem the bonds as early as possible. so I kindly request you to please instruct me when I can redeem the bonds and which buy back applicatin for I have to down load.
Thanking you in anticipation.
With regards
REPLY
Please let me know how I can redeem L&T infrastructure bonds 2011 series2
My father-in-law late Dr R.C. Kashive, resident of E/2, 251, Arera Colony Bhopal, had purchased 10 debentures on 24/3/2012 of Rs 10,000/-. Then he had submitted the original Debenture Bonds to Sri Shekhar Prabhudesai, Company Secretary & Compliance Officer, L & T Infrastructure Finance Company Ltd. by speed post dated 6/9/2016/ No RI500212535IN, as he was suffering from multiple health problem.
Unfortunately Dr Kashive died on 26th October 2016. Please verify the receipt of above debentures, my mother-in-law is having photocopy of it and above receipt. Please let me know how the maturity of debentures with be given to her.
Please reply
Sincerely
Dr Rajeeva Guhey
A6 Jeevan Vihar
Telibandha
Raipur Chhattisgarh
492006
Hi Manshu, I have these bonds in physical form as I didn’t had demat account at that time. But now I have opened a demat account. Can I dematerialize these LnT infrastructure bands in my demat account during the lock-in period? Also, just to confirm – I just have to approach my demat account service provider, say ICICI with original certificates to dematerialize the bonds. I don’t need to contact the registrar of the bonds directly.
Thanks
Hi Manshu,
I have a similar question here – Would there be any difference in the way the interest & maturity amount is paid back; depending on whether the LnT bonds are held in Demat form or physical form?
More specifically – Does the interest & maturity proceeds would be done ‘automatically’ to the linked savings account without any manual intervention if the bond is held in Demat form (say ICICI Bank savings account linked to ICICI Direct account in which bond are held in demat form); but if the bond are held in physical form then physical cheques for each year would be mailed at beginning of each year & the physical bond needs to be mailed to LnT at the end of subscription period to get the maturity amount cheque . Is this correct?
Please share your view. Regards.
Hi Manshu, Are these bonds secured? I am little surprised that you didn’t mention this fact. Thanks.
Yeah, they are secured.
Dear Manshu,
Thanks for the post as well as for the attempt that you made to inform us about the new issue by L&T beforehand. But one thing I would like to mention is irrespective of the market position and buyback options, Bond Price Volatility will always effect the investor – whether it is an individual or an organization. The bond is paying a rate of 9% interest subject to the market’s prevailing of interest. But when they will rise there will definitely a bond price volatility….and the prices at that time will reduce. So why is it said that the volatility in the market wont effect an investor???
Two things – First, interest rate of 9% is NOT subject to market conditions. Interest rate of 9% is set, and nothing will change that. You will get that 9% regardless of what the market conditions at the time is.
Second, the interest rate environment will affect market prices of the bonds, and you are only affected if you sell the bond on an exchange at market prices. If you exercise the buyback or redemption then L&T or IDFC or whoever will redeem it at par value or the compound value in the case of cumulative option.
Does that make sense?
Hi
I am with Manshu, the bonds wont be listed till another 5 years. Going by the trend of lack in trading activities on NCD’s & ETF’s it might be prudent to use buy back option considering the intrest scenario 5 years down the lane..