PFC (Power Finance Corporation) is the latest company to come out with tax free bonds and the terms are exactly the same as the NHAI bond issue.The only two differences that I noticed was that the minimum subscription for the NHAI issue was Rs. 50,000 and for this issue is Rs. 10,000, and these bonds will list only on the BSE while the NHAI issue was going to list on both BSE and the NSE.
Other than that, everything appears to be the same to me.
The issue opens on Friday, December 30th 2011 and will close on January 16th 2011. It is likely that this issue gets over-subscribed quickly because the same thing happened with the NHAI issue that had similar characteristics.
If that happens then the PFC issue will close the issue before the January 16th 2011, so if you are interested in these bonds then subscribe as soon as you possibly can.
The total issue size is Rs. 4,033 crores and while that doesn’t make any difference to individual investors – I want to keep a track of the size of these issues to see how much money flows into them, so that’s the reason for mentioning it here.
Here are some of the other terms of this issue.
| Options |
Tranche 1 Series I |
Tranche 1 Series II |
| Face Value |
Rs. 1,000 |
Rs. 1,000 |
| Term |
10 years |
15 years |
| Interest payment |
Annual |
Annual |
| Coupon Rate |
8.20% |
8.30% |
Based on the questions I saw for the NHAI issue – I think a lot of people are confusing the 80CCF infrastructure bonds with these bonds.
So, I want to clarify that these are not infrastructure bonds and they do not come under the 80CCF limit – PFC had issued infrastructure bonds earlier, but they closed for subscription on November 4th 2011. If you came here looking for the Rs. 20,000 additional limit under 80CCF then this is not the instrument for you.
You need to choose one of the open infrastructure bonds from this list.
The next common question is about returns comparing tax free bonds with long term fixed deposits and you can find a very detailed post on that subject here.
I can’t think of anything else with respect to the PFC tax free bonds that I should mention here, so if you have any questions or observations – please leave a comment.
Hi Shiv,
Can you please share your analysis on which are the best Tax Free bonds to buy from Secondary Market (as of today).
May Thanks.
I have received today interest of irfc 7.40 % dear dr punit so don’t worry it should be credited to you later today or on Monday because tomorrow is Sunday
Thanks for assurance.