IIFCL 8.91% Tax-Free Bonds Tranche II – December 2013
This post is written by Shiv Kukreja, who is a Certified Financial Planner and runs a financial planning firm, Ojas Capital in Delhi/NCR. He can be reached at [email protected]
India Infrastructure Finance Company Limited (IIFCL) is back again to offer its tax-free bonds and as expected this time, it is carrying higher rate of interest for all the maturity periods. The issue is getting opened for subscription from Monday, 9th of December and is scheduled to get closed along with the HUDCO 9.01% issue on January 10th, 2014, which is a Friday.
Size of the Issue – IIFCL raised Rs. 1,213.01 crore from its Tranche I issue in October and plans to mop up another Rs. 3,000 crore from this issue, including the green shoe option of Rs. 2,000 crore.
If the company is able to successfully raise its target amount of Rs. 3,000 crore from this issue, then it plans to launch its Tranche III issue sometime in January again.
Categories of Investors & Allocation Ratio – Investors have been categorised in the four usual categories and the percentage allocation has been the same as it was in IIFCL’s first issue:
Category I – Qualified Institutional Bidders (QIBs) – 15% of the issue is reserved i.e. Rs. 450 crore
Category II – Non-Institutional Investors – 20% of the issue is reserved i.e. Rs. 600 crore
Category III – High Net Worth Individuals including HUFs – 25% of the issue is reserved i.e. Rs. 750 crore
Category IV – Resident Indian Individuals including HUFs – 40% of the issue is reserved i.e. Rs. 1,200 crore
NRIs Ineligible to Invest – Once again, IIFCL has not allowed Non-Resident Indians (NRIs) and Qualified Foreign Investors (QFIs) to participate in this issue.
Coupon Rates on Offer – Coupon rates in this issue are absolutely same as those got offered in the NTPC issue – 8.91% per annum for the 20 year option, 8.73% per annum for the 15 year option and 8.66% per annum for the 10 year option.
These rates are applicable for the retail investors investing Rs. 10 lakh or below. All other investors will see a cut of 25 basis points or 0.25% per annum for the respective maturity periods.
Rating of the Issue – Like its previous issue, IIFCL Tranche II issue is also ‘AAA’ rated. CARE, ICRA, Brickwork Ratings and India Ratings, all these four rating agencies have assigned their highest credit rating to this issue.
These bonds are again ‘Secured’ in nature as certain receivables of the company will be charged equivalent to the outstanding amount of the bonds.
Allotment on First Come First Served Basis – Subject to the allocation ratio, allotment will be made on a first come first serve (FCFS) basis in each of the investor categories, based on the date of upload of each application into the electronic system of the stock exchange.
Listing – IIFCL will get these bonds listed only on the Bombay Stock Exchange (BSE). As required by the listing rules of the SEBI, the company has committed to get the bonds allotted and listed within 12 working days from the closing date of the issue.
No Lock-In Period – As these bonds are freely tradable, an investor may sell them on the BSE whenever he/she wants after these bonds get listed on the exchange. That is how these bonds do not carry any lock-in period.
Demat/Physical Option – Though these bonds are tradable if taken in the demat form, investors have the choice to subscribe for these bonds in physical form as well, if they don’t have a demat account or they don’t want to take these bonds in the demat form.
Interest on Application Money & Refund – IIFCL will pay interest to the successful allottees on their application money, from the date of realization of application money up to one day prior to the deemed date of allotment, at the applicable coupon rates. Unsuccessful allottees will get interest @ 5% per annum on their refund money.
Minimum Investment – Investors are required to invest a minimum of Rs. 5,000 in this issue i.e. at least 5 bonds of Rs. 1,000 face value each.
Interest Payment Date – IIFCL has not fixed the date of interest payment for this issue as yet. It has decided to pay its first due interest exactly one year after the deemed date of allotment.
NTPC issue, which got closed on Thursday, received an overwhelming response from all the categories of investors. As IIFCL is offering coupon rates absolutely same as those offered by NTPC, it is very much clear that these tax-free interest rates are very attractive.
Though I don’t expect this issue to get subscribed as fast as the NTPC issue, the investors, who missed out on the NTPC issue and/or want to invest only in ‘AAA’ rated securities, I think this issue offers a very good opportunity.
Also, a number of macro economic data is expected to get released sometime next week here, such as trade deficit for the month of November, IIP growth figures, CPI inflation, WPI inflation etc. This data will be very crucial for the RBI Governor Dr. Raghuram Rajan to take his final decision for the RBI’s monetary policy of December 18th.
One more rate hike would once again ruin the mood of the market participants in the bond markets and result in a jump in the G-Sec yields. Investors should keep a close eye on all these events also.
Application Form of IIFCL Tax Free Bonds
IIFCL Tax-Free Bonds – Bidding Centres
IIFCL Tax-Free Bonds – Banking Matrix
Note: As per SEBI guidelines, ‘Bidding’ is mandatory before banking the application form, else the application is liable to get rejected. For bidding of your application, any further info or to invest in IIFCL tax-free bonds, you can contact me at +919811797407
the ‘risk’ of interest rate hike has been so long(for debt investor ), but I believe 9%(approx) of rate is quite high in itself.
But a rate hike is surely in order, as real estate guys must face a crash, it is amazing they holding such prices even at these rates, can anyone enlighten what has been highest bond rates in recent past? 10% or more?
Tax-Free Bond coupon rates have never gone above these levels. 9.01% for a ‘AA+’ rated issue and 8.92% for a ‘AAA’ rated issue have been the highest rates so far.
Hi Shiv,
“One more rate hike would once again ruin the mood of the market participants in the bond markets and result in a jump in the G-Sec yields” – Therefore should we wait a little longer and take a chance for getting higher coupon rates for IRFC, NHAI etc.
Good writeup and guidance as usual. Excellence of details is maintained in each of your articles. I am really grateful that i came across this site !!
Thanks a lot Aditya for your kind words !!
Nobody knows what Dr. Rajan is going to do on 18th December. It is totally up to you whether you want to wait for RBI’s monetary policy decision or you want to go ahead with these bonds. NTPC opportunity is behind us now.
RBI’s decision will hinge on inflation numbers next week. I have high hopes that the RBI is not going to hike the Repo Rate this time around and if it goes that ways, then you’ll see lower coupon rates with the forthcoming issues.
just came across this news a few days ago – http://www.google.com/url?sa=t&rct=j&q=&esrc=s&frm=1&source=newssearch&cd=2&cad=rja&ved=0CCwQqQIoADAB&url=http%3A%2F%2Fwww.thehindubusinessline.com%2Fcompanies%2Fiifcl-net-dives-59-in-first-half%2Farticle5383850.ece&ei=9ymkUqSKO8SxrAeJvoDwBA&usg=AFQjCNHjC4ghsFHsXzLWfJpnEgPOaesZXg
I am looking to invest in IIFCL bonds so how much of a factor should this be in deciding to invest in this issue ?
Hi Aditya,
It definitely matters, but then it is happening with every other public sector financier here in India. Personally, I’ll not give much importance to it in the short-term.
Is it possible to rank all the AAA PSUs issuing TF Bonds. And separately Same also for all AA PSUs?
It is not impossible to rank these issues based on the fundamentals of all their issuers, but it is not easy either. Some of these companies are listed on the stock exchanges, so disclosures are high. But, some are unlisted, so it is difficult to analyse those companies properly. If I get some time in the next couple of weeks, I’ll try to do that.
I am planning to invest in this issue but going to get funds on 10th so I hope it’s not fully subscribed in 2 days like NTPC.
Hi Ikjot,
IIFCL issue will not get oversubscribed in 2 days.
That’s good, thanks Shiv for the reply.
You are welcome!
Hi
Why would a rate hike impact existing bonds? Wont yield increase for already listed ones. Please clarify.
Thanks
Hi Harineem,
As the interest rates go up, the yield as well as the price of already listed bonds go down, as the investors expect higher coupon rates from the forthcoming bonds.
I thought yield goes up because price goes down as you are getting interest at bonds less than par value. Makes a bit of sense what you are saying because if the same amount can be lent only at a higher rate from banks then the bond subscriber should also expect a higher rate of return.
Any link which can help in understanding this more.
Thanks a lot for answering all my basic queries with such patience every time.
You are welcome Harineem !!
Though there are many such links which can help you understand these relationships, here is one such link:
http://moneyover55.about.com/od/howtoinvest/qt/bondpricesrisinginterestrates.htm
Day 1 (December 9) subscription figures:
Category I – Rs. 55.40 crore as against Rs. 450 crore reserved
Category II – Rs. 306.17 crore as against Rs. 600 crore reserved
Category III – Rs. 380.03 crore as against Rs. 750 crore reserved
Category IV – Rs. 292.64 crore as against Rs. 1,200 crore reserved
Total Subscription – Rs. 1,034.24 crore as against total issue size of Rs. 3,000 crore
Not as great as the NTPC issue, but this issue has got reasonably subscribed on the first day.
Hi Shiv,
Again a silly and an apparent question, but just want to double check. I would be applying tomorrow so i assume I would get full allotment right ?
Yes Aditya, you’ll get full allotment.
Hi Shiv,
One query – IIFCL and HUDCO will pay the interest at coupon rates for successful allotments for the application->allotment period. Normally when would this interest get credited in our bank accounts ?
Hi Aditya,
Interest on application money is paid as the bonds get allotted, around that time itself.
Thanks for the info Shiv
You are welcome Aditya!
Hi Shiv
Do you know what is causing delay in IRFC TFB Issue? IRFC had filed prospectus with SEBI a week before NTPC and there is no sign of IRFC bonds yet. Also , do you know if NHAI will raise money at all through tax free bonds this year?
Regards
Ramadas
Hi Ramadas,
It is almost certain that NHAI will issue tax-free bonds this financial year. It has already appointed Book Running Lead Managers (BRLMs) for the issue.
But, I am not sure why IRFC is delaying it. It should have launched its issue by now.
Day 2 (December 10) subscription figures:
Category I – Rs. 355 crore as against Rs. 450 crore reserved
Category II – Rs. 404.64 crore as against Rs. 600 crore reserved
Category III – Rs. 446.25 crore as against Rs. 750 crore reserved
Category IV – Rs. 431.29 crore as against Rs. 1,200 crore reserved
Total Subscription – Rs. 1,637.19 crore as against total issue size of Rs. 3,000 crore
This issue is getting a better response as compared to the HUDCO issue.
Please send me if any comments on this bond
Day 3 (December 11) subscription figures:
Category I – Rs. 355 crore as against Rs. 450 crore reserved
Category II – Rs. 440.52 crore as against Rs. 600 crore reserved
Category III – Rs. 492.46 crore as against Rs. 750 crore reserved
Category IV – Rs. 525.89 crore as against Rs. 1,200 crore reserved
Total Subscription – Rs. 1,813.88 crore as against total issue size of Rs. 3,000 crore
Less of a retail interest and more in other categories here , exactly opposite of HUDCO 🙂
When, according to you Shiv, will this get closed ?
I am a first time TFB investor and would be happy only when i see the bonds in my demat account 🙂
It should take at least 5-7 working days for it to get closed.
My broker left out 1 small thing in the form – he did not tick the category (point no 2). According to him, it should not cause any problem as the category can be determined from the PAN number. All other details, including the Series in which the bonds are applied is correct.
Will my application still fail ?
I don’t know but I don’t think it should. I don’t find any reason for it to fail.
Hi Shiv,
I can’t find out the reason behind delay of IRFC tax free bonds issue. This was suppose to come before NTPC.
Same here Ikjot. Somebody should call IRFC management and ask them.
i read in businessline website, the issue will be in dec-jan.
Day 4 (December 12) subscription figures:
Category I – Rs. 365 crore as against Rs. 450 crore reserved
Category II – Rs. 479.94 crore as against Rs. 600 crore reserved
Category III – Rs. 530.08 crore as against Rs. 750 crore reserved
Category IV – Rs. 602.45 crore as against Rs. 1,200 crore reserved
Total Subscription – Rs. 1,977.47 crore as against total issue size of Rs. 3,000 crore
Hi Shiv
I am going to submit my application for 1000 Bonds for IIFCL Bonds / 20 Years /. Coupon rate 8.66 %. In category. II ( as my status is A. O. P. )
As on Day 4 / December 12 in category. II. – Rs. 479.94. Crore as against. Rs. 600 crore reserved
So as per my thinking I will get the full allotment if Rs. 600 crore is not filled to-day
Hi Paresh,
It is obvious that you’ll get full allotment if Category II does not get fully subscribed by 5 p.m. today.
Day 5 (December 13) subscription figures:
Category I – Rs. 435.08 crore as against Rs. 450 crore reserved
Category II – Rs. 505.97 crore as against Rs. 600 crore reserved
Category III – Rs. 540.71 crore as against Rs. 750 crore reserved
Category IV – Rs. 660.83 crore as against Rs. 1,200 crore reserved
Total Subscription – Rs. 2,142.59 crore as against total issue size of Rs. 3,000 crore
Looks like new issue like IRFC will be open after this IIFCL closes 🙁
Ya, no issues lined up in the next 10 days at least, except IRFC.
sir,
when is IRFC opening ? i wnat to withdraw from iifcl and opt for irfc as interest rates are expected to be higher 😉
IRFC issue is expected to get launched anytime on or after December 23rd.
Hi Shiv,
I had a question regarding long term savings. I was wondering if I should invest in long term debt funds or should I invest in these bonds?
Instead of paying for an LIC policy, I could invest every year in a bond/debt mutual fund.
For example, I want money by 1st Jan 2030, then I would start investing every year from now. If there are no bonds available, I could buy in secondary market.
My question is:
Would I be better off investing in long term debt funds or bonds?
Hi Anil,
It is like a personal query, which I won’t like to respond to here on this forum. I’ll try to do a post on the same though.
For the benefit of illiterate 🙂 investors like me , you might also want to include FDs in that comparison if you do a post.
For the benefit of illiterate investors 🙂 like me , you might want to add FDs also in that comparison
I think FDs don’t stand anywhere near these tax-free bonds, except only a couple of benefits – 1. your investment is insured up to Rs. 1 lakh and 2. the interest gets compounded quarterly.
But, still I’ll try to keep FDs in the comparison table.
Thanks Shiv anyways 🙂
You are welcome Anil!
Hi,
All those who applied for NTPC TF Bonds. The allotment of bonds happened today.
Thanks George for the info !! You’ve got the bonds credited to your account or you’ve some other source of info?
Yes that’s right. 100% allotment.
That’s Great!
I had applied for the NTPC bonds on the first date of issue and I have also got full allotment as assured by you.
That’s Great !! 🙂
Day 6 (December 16) subscription figures:
Category I – Rs. 435.18 crore as against Rs. 450 crore reserved
Category II – Rs. 521.74 crore as against Rs. 600 crore reserved
Category III – Rs. 553.15 crore as against Rs. 750 crore reserved
Category IV – Rs. 728.23 crore as against Rs. 1,200 crore reserved
Total Subscription – Rs. 2,238.30 crore as against total issue size of Rs. 3,000 crore
Day 7 (December 17) subscription figures:
Category I – Rs. 435.18 crore as against Rs. 450 crore reserved
Category II – Rs. 523 crore as against Rs. 600 crore reserved
Category III – Rs. 565.01 crore as against Rs. 750 crore reserved
Category IV – Rs. 775.36 crore as against Rs. 1,200 crore reserved
Total Subscription – Rs. 2,298.55 crore as against total issue size of Rs. 3,000 crore
Do you feel that maybe a possibility of a higher coupon in forthcoming issues is slowing down the current HUDCO and IIFCL issues ?
Some retail/HNI investors are still investing, whereas some smarter retail/HNI investors, who expect higher rates in the upcoming issues, have opted not to put money in these two issues. They are waiting for the IRFC and NHB issues to make their investments.
sir, i saw the news that RBI has not hiked rates. will IRFC come with higher coupon rate or not ?
That is what only time will tell Pradeep, but the unchanged stance of the RBI w.r.t. the policy rates is a very welcome move. People, who were waiting for the higher rate issues to invest in these tax free bonds, should now deploy at least some portion of their investment in the current issue of IIFCL tax-free bonds.
Hi Shiv,
I have invested the refund amount from NTPC in the IIFCL bonds, hope that I’ll get the full allotment?
thanks,
Hemant
Yes Hemant, you’ll get the full allotment.
thanks Shiv.
You are welcome!
Day 8 (December 18) subscription figures:
Category I – Rs. 435.18 crore as against Rs. 450 crore reserved
Category II – Rs. 530.53 crore as against Rs. 600 crore reserved
Category III – Rs. 578.51 crore as against Rs. 750 crore reserved
Category IV – Rs. 815.78 crore as against Rs. 1,200 crore reserved
Total Subscription – Rs. 2,359.99 crore as against total issue size of Rs. 3,000 crore
It is getting boring 🙂 🙂 This issue is crawling now
🙂 You want it to be like the NTPC issue or NHPC issue ??
Its delaying my allotment and since i am a first time TFB investor, i am sort of getting impatient 🙂
oh ok… I see. Then you have all the rights to be impatient !! I must say you would be very excited on the date of its listing.
Hi Shiv
If I apply to day Rs 10 Lac in category I I. , I think I will get the full allotment because as on December 18 category II – Rs. 530.83 crore as against Rs. 600 crore reserved
Yes, that’s right Paresh!
Hi Shiv,
One question – I have already invested 5 lacs in Cat 4 in IIFCL Bonds. Can I invest 5 lacs more since the Cat 4 is still not oversubscribed ? Will my application get rejected for multiple applications even though the total is not more than 10 lacs ?
Thanks,
Gaurav
Hi Gaurav,
No, your application(s) won’t get rejected. You can submit multiple applications up to any investment amount you want. To get higher rate of interest applicable only to the retail investors, the investment amount should not be more than Rs. 10 lakh.
So, if I invest 5 lacs more then I will still get the higher interest rate. right ?
Yes, that’s right.
ok, one more question. Do you think RBI decision to not increase key rates yesterday will decrease the coupon rates for IRFC and other TFBs coming in the future ?
It depends on the timing of these issues. If IRFC files its final prospectus quickly, then I think the rates would be similar or probably higher than the current issue of IIFCL. But, if they delay it further and by that time G-Sec yields fall further from here, then you’ll get lower coupon rates in the upcoming issues.
Day 9 (December 19) subscription figures:
Category I – Rs. 435.18 crore as against Rs. 450 crore reserved
Category II – Rs. 537.01 crore as against Rs. 600 crore reserved
Category III – Rs. 590.43 crore as against Rs. 750 crore reserved
Category IV – Rs. 849.11 crore as against Rs. 1,200 crore reserved
Total Subscription – Rs. 2,411.73 crore as against total issue size of Rs. 3,000 crore
NHAI to launch its tax-free bonds issue sometime around mid-January.
http://www.thehindubusinessline.com/markets/nhais-taxfree-bond-issue-to-hit-market-in-midjan/article5478623.ece
Has IRFC filed its prospectus? How much time does a company get to open the issue after filing the prospectus?
Hi Simple,
IRFC filed its draft shelf prospectus a couple of days before NTPC did it. While NTPC issue got opened, got subscribed, got allotted and got listed also, IRFC is yet to file their final prospectus.
I’ve observed that normally it takes 15-25 days for a company to launch its issue after filing its draft shelf prospectus.
Ok Shiv. Thank You!
You are welcome!
Inflation bonds have opened. can you provide details ?
Hi Pradeep,
I’ve started writing about it. I’ll post it either today or tomorrow.
great sir. Good work 🙂
Hi Shiv
NHB TFB opening on Dec-30 as per latest report from businessline.
http://www.thehindubusinessline.com/industry-and-economy/banking/nhb-taxfree-bonds-issue-to-open-on-dec-30/article5482796.ece
What is your guess on interest rate? Will it be higher or lower than IIFCL?
Regards
Ramadas
Hi Ramadas,
It is very difficult to guess NHB’s coupon rates as the G-Sec yields have been quite volatile for the past 4-5 days. I would like not to do that this time.
Can you tell if this would be AAA or AA or less? How were past tfb issued by NHB rated?
NHB is a reserve bank of India subsidiary and a regulator for housing finance companies. Nothing less than AAA for NHB for sure
Regards
Ramadas
Yes, that’s absolutely correct! I would have replied in a similar manner. NHB issue is ‘AAA’ rated by CRISIL, CARE and ICRA. Thanks Ramadas!
NHB will give an opportunity to diversify the portfolio considering that it is a housing finance bank controlled and owned by RBI. Checking on the fundamentals of NHB, I found that they are having negligible NPA.
Some info which gives a birds eye view of their strength is give below which I have managed by Goggling. Over all my impression is that NHB will get fast subscribed like NHPC and NTPC considering that the fundamentals are better. While Shiv is making detailed analysis , I hope this will help some of you.
“On an overall basis, NHB’s Gross NPA% increased from 0.01% as on June 30, 2012 to 0.53% as June 30, 2013 on account of one large project exposure slipping into NPA category. NHB’s gearing has increased over last two years as balance sheet growth (24% in 2012-13 and 22% in 2011-12) was far in excess of internal capital generation (around 12% over last two years). NHB’s capitalisation (CRAR of 16.59% as on June-2013) is adequate in relation to risk profile of its portfolio. Further, its ability to get capital, in case of need, is relatively high in light of its strategic importance to the Government of India (GoI).”
I found that they also have a good Asset base when considering there exposure. NHB reported a net profit of Rs. 450 crore over an asset base of Rs. 38,721 crore for the year 2012-13*,as compared with a net profit of Rs. 387 crore over an asset base of Rs. 31,332 crore for the year 2011-12. NHB reported gross NPA% of 0.53% and net NPA% of 0.45% as on June 30, 2013. NHB’s capital adequacy was 16.59% as on June 30, 2013.
Thanks George for this detailed analysis !!
Day 10 (December 20) subscription figures:
Category I – Rs. 435.18 crore as against Rs. 450 crore reserved
Category II – Rs. 562.05 crore as against Rs. 600 crore reserved
Category III – Rs. 598.72 crore as against Rs. 750 crore reserved
Category IV – Rs. 878.30 crore as against Rs. 1,200 crore reserved
Total Subscription – Rs. 2,474.25 crore as against total issue size of Rs. 3,000 crore
Thanks Shiv
You are welcome Aditya!
Also, I got your mail in the afternoon today, but could not respond to it. I’ll do that soon.
Ok no problem Shiv
Could you please reply to my mail Shiv ? depending on that i will have to plot the next strategy
It just skipped my mind today Aditya. I’ll do that sometime tomorrow for sure.
Thanks for the replying to my mail Shiv
You are welcome Aditya!
IRFC issue to get launched on January 6th. Coupon Rates are 8.48% p.a. for 10 years and 8.65% p.a. for 15 years. 20 years option not available. The issue closes on January 20th.
Hi Shiv
Thanks for the information. It is very disappointing that IRFC is not giving a 20 year option and interest rates are much lower. I feel they missed the bus to come up with the issue at the right time.
I hope NHB which opens on Dec-30 will be able to come up with better coupon rate
Regards
Ramadas
Yes, it is very disappointing Ramadas! Also, as IRFC’s coupon rates are out now, I think NHB’s coupon rates would be even lower than that of IRFC and that would be more disappointing. Both companies have missed the bus.
Any reason why NHB coupon rates would be lower than that of IRFC? And does that mean that now IIFCL will close very fast?
Since inflation is widely expected to tick lower in January, NHAI issue seems already doomed to fail.
I think NHB has filed its draft prospectus quite late and since then the G-Sec yields have been moving lower only. That is the reason I think its rates would be lower than IRFC. I think IIFCL issue should get closed in the next 5-8 days time.
You are spot on. The GSec is are trading with lower yield following RBI and Fed decisions.
Many of the investors were waiting for higher interest bonds and with the announcement of IRFC that expectation is taken care. Monday IIFCL and HUDCO will have more takers and the bonds will close in a day or 2. We can expect lower coupon rates for NHB, NHAI bonds. Considering that banks also started reducing the lending rates for housing loans the chances of bond coupon rates going up is limited.
Hi Shiv
Looking at the draft prospectus of NHB , they have a 20 year option unlike IRFC. Assuming same interest rates as IRFC , may be 20 year option of NHB will be priced at 8.71%. Hope it doesnt go below that
Regards
Ramadas
Hi Ramadas,
Yes, there exists this possibility, but then it would be lower than 8.91% which ‘AAA’ rated IIFCL is currently offering and 9.01% which ‘AA+’ rated HUDCO is offering. Why not go for IIFCL or HUDCO then, if you haven’t already ??
Hi Shiv
I have applied to both IIFCL and HUDCO in earlier issues and current issue.
I was looking for IRFC and NHB to diversify my TFB holdings. I am a bit concerned in concentration risk in a particular sector in infrastructure whether it is power or housing. IRFC caters to railways which is different infrastructure sector compared to rest of sectors which IIFCL lends to. NHB being a bank itself offers another diversification oppurtunity. In fact , the subscription levels of NHPC and NTPC shows this diversification interest.
20 year bonds is a long time frame and you never know what will happen to current AAA companies in that time frame. ITI , HM , HMT are all classic examples. Thought of not putting all eggs in one basket.
Regards
Ramadas
Hi Ramadas,
Your thoughts are noble and correct also.
Hi Shiv,
Does the investment in this bond come under Section 80CCF or Section 80C for tax implications ?
Thanks,
Adak
Hi Adak,
No, investment in these bonds is not eligible for 80CCF or 80C deduction. Deduction u/s. 80CCF is history now. Only the interest income is tax-free with these bonds.
Hi Shiv
To-days position in category II – as on Dec. 20 – Rs. 562.05 crores against Rs. 600 crore reserved.
What you think if I apply for Rs. 10 Lac to-morrow , suppose the subscription is oversubscribe in categoey II on Monday then i will get the partial allotment and if not fully subscribe up to Rs. 600 crore then i will get the full allotment.
Day 11 (December 23) subscription figures:
Category I – Rs. 435.18 crore as against Rs. 450 crore reserved
Category II – Rs. 573.56 crore as against Rs. 600 crore reserved
Category III – Rs. 613.94 crore as against Rs. 750 crore reserved
Category IV – Rs. 921.46 crore as against Rs. 1,200 crore reserved
Total Subscription – Rs. 2,544.14 crore as against total issue size of Rs. 3,000 crore
Today’s subscription numbers please 🙂
National Housing Bank (NHB) Tax-Free Bonds issue opens on December 30th. Coupon Rates – 8.51% for 10 years, 8.88% for 15 years and 9.01% for 20 years. It is a ‘AAA’ rated issue and closes on January 31, 2014. I am pleasantly surprised with the coupon rates.
can u provide the link to this? Is this news confirmed?
Here are the links to the NHB Prospectus and the application forms Sam:
http://www.nhb.org.in/Whats_new/NHB-Prospectus-Tranche-I.pdf
http://www.akstockmart.com/akintra/BA/DNLDFORM.aspx?refno=dU6gu20m1nc=
What is the issue size? How much is reserved for category 4?
The issue size is Rs. 2,100 crore and 40% of the issue is reserved for Category IV i.e. Rs. 840 crore for the retail investors investing Rs. 10 lakh or less.
I will stick with IIFCL as 20 years is a long time. If it was IRFC at 9.01% p.a. I would have jumped to apply.
Did not get the full meaning of your comment .. can you please elaborate
Do you mean to say that NHB is less acceptable than IIFCL or IRFC? Considering that it is a bank owned by RBI, there is good control by RBI and the fundamentals are also good. IIFCL and IRFC are also having the same level or more risk compared to NHB. For example IIFCL pumps huge funds in few projects and risk is high and return is low. NHB funding goes to many banks and housing projects and the NPA need not go that high. IRFC finances projects of Indian Railways. The bond is issued by IRFC and not Indian railways. If you think it is better to put money for 10 years, I will go with you considering that IIFCL is giving 8.66%. But I fail to understand why you feel it is better to invest for 20 years in IRFC.
I agree with George here also.
Even I did not get it. NHB is a wholly-owned subsidiary of the RBI and I trust RBI more than any other regulator or any other company, even more than the government.
This is really Good news. Some how the news has not reached news papers. NHB uploaded the prospectus in their website. I am sure NHB TF will have more takers for 15years bond compare to other issues. There is a 37 BP difference from 10 years to 15 years and just 13 BP from 15 to 20 years. I felt the 10 years bond should have been 8.66%. But since the pricing is related to Govt Securities, I am sure they could not fix anything above 8.51 considering that the 10 years security was trading between 8.7 to 9% recently. My gut feeling is that this bond also will get subscribed in 1-2 days time considering the size , coupon rate and strength of NHB.
I agree with you George, this issue should get subscribed quite soon, but not as soon as 1-2 days. Let’s see.
Hi Shiv,
I’m also surprised at rate of 9.01% for AAA rated bond. I will def go for this issue because future rates might not be as good as this.
That’s Great !!
Here are the links to the NHB Prospectus and the application forms:
http://www.nhb.org.in/Whats_new/NHB-Prospectus-Tranche-I.pdf
http://www.akstockmart.com/akintra/BA/DNLDFORM.aspx?refno=dU6gu20m1nc=
Day 12 (December 24) subscription figures:
Category I – Rs. 435.18 crore as against Rs. 450 crore reserved
Category II – Rs. 580.66 crore as against Rs. 600 crore reserved
Category III – Rs. 617.80 crore as against Rs. 750 crore reserved
Category IV – Rs. 950.56 crore as against Rs. 1,200 crore reserved
Total Subscription – Rs. 2,584.21 crore as against total issue size of Rs. 3,000 crore
IRFC has also announced it now. Their IPO opens from jan 6. I hope the interest rate will be as good as NHB or better
As Shiv has already posted , IRFC coupon Rates are 8.48% p.a. for 10 years and 8.65% p.a. for 15 years. No 20 year option
Day 13 (December 26) subscription figures:
Category I – Rs. 435.18 crore as against Rs. 450 crore reserved
Category II – Rs. 592.80 crore as against Rs. 600 crore reserved
Category III – Rs. 619.86 crore as against Rs. 750 crore reserved
Category IV – Rs. 970.30 crore as against Rs. 1,200 crore reserved
Total Subscription – Rs. 2,618.14 crore as against total issue size of Rs. 3,000 crore
Hi Shiv,
Sometime ago you agreed to write a post detailing the interest payment dates of recent TFB issues. Just wanted to ask you can you do this now?
Hi Ikjot,
I’ve already completed 70% work on this post, will post it in the first week of January.
Sir,
It would be better to have a single link for this and you can keep updating this when new issue comes up. We can boomark this page for our reference. Is this fesiable ? 🙂
Sure, I’ve already planned to just keep updating the table for this post.
Thank you so much, really appreciate your help.
You are welcome!
Day 14 (December 27) subscription figures:
Category I – Rs. 435.18 crore as against Rs. 450 crore reserved
Category II – Rs. 614 crore as against Rs. 600 crore reserved
Category III – Rs. 621.21 crore as against Rs. 750 crore reserved
Category IV – Rs. 984.48 crore as against Rs. 1,200 crore reserved
Total Subscription – Rs. 2,654.86 crore as against total issue size of Rs. 3,000 crore
Day 15 (December 30) subscription figures:
Category I – Rs. 435.18 crore as against Rs. 450 crore reserved
Category II – Rs. 624.11 crore as against Rs. 600 crore reserved
Category III – Rs. 617.15 crore as against Rs. 750 crore reserved
Category IV – Rs. 1,002.88 crore as against Rs. 1,200 crore reserved
Total Subscription – Rs. 2,679.32 crore as against total issue size of Rs. 3,000 crore
Today’s subscription numbers please…
Day 16 (December 31) subscription figures:
Category I – Rs. 435.18 crore as against Rs. 450 crore reserved
Category II – Rs. 624.26 crore as against Rs. 600 crore reserved
Category III – Rs. 626.55 crore as against Rs. 750 crore reserved
Category IV – Rs. 1,022.73 crore as against Rs. 1,200 crore reserved
Total Subscription – Rs. 2,708.72 crore as against total issue size of Rs. 3,000 crore
Todays numbers please 🙂
Day 17 (January 1) subscription figures:
Category I – Rs. 435.18 crore as against Rs. 450 crore reserved
Category II – Rs. 624.33 crore as against Rs. 600 crore reserved
Category III – Rs. 629.80 crore as against Rs. 750 crore reserved
Category IV – Rs. 1,037.79 crore as against Rs. 1,200 crore reserved
Total Subscription – Rs. 2,727.09 crore as against total issue size of Rs. 3,000 crore
Hi Shiv,
It is mentioned that NRIs are now allowed to invest in the IIFCL. I have just re-located abroad so I would not be an NRI in the current FY (2013-14).
However, I would be one in the next FY.
Are there are other issuers who allow NRIs to invest in these infrastructure bonds?
Hi Ashwin,
HUDCO and IRFC both allow NRIs to invest in their tax-free bond issues. HUDCO issue is closing tomorrow and IRFC issue is getting opened from Monday.
Thanks a lot, Shiv.
Can we expect tax free bonds from various issuers all through the year (2014) or will they taper off?
I think most of the issues have already hit the streets, very few have left, but still I think more issues are expected at least till January end.
Please post today’s subscription numbers…
Day 18 (January 2) subscription figures:
Category I – Rs. 435.18 crore as against Rs. 450 crore reserved
Category II – Rs. 624.33 crore as against Rs. 600 crore reserved
Category III – Rs. 643 crore as against Rs. 750 crore reserved
Category IV – Rs. 1,054.65 crore as against Rs. 1,200 crore reserved
Total Subscription – Rs. 2,757.16 crore as against total issue size of Rs. 3,000 crore
Hi Shiv,
Can you please put today’s figures? I could not apply for IIFCL as I didn’t have money. Later when money came I found NHB issue more interesting and then waiting for NHAI issue to judge on what is to be done with remaining money. After IRFC I feel that I should not count on NHAI TBF and apply for IIFCL before Friday. Can you please do this favour to me?
Btw the Book review by Manshu is good. Please keep posting such articles when there is no new NCD or TBF issue, so that we as reader will have our food following onemint.
Thanks, Pinaki
Hi Pinaki,
I have been updating the subscription figures regularly on the 2nd page of this post, you can check those updates by clicking on “Next Comments”.
Also, we try to keep covering some good topics whenever we are able to. Manshu has been doing this great job for so many years now and I joined him only in May-June 2012. I am taking a small break due to exhaustion and some renovation work at my place.
We are committed to keep covering topics which interest our readers and also those topics which are suggested by them. If you have any suggestions, please post them here – https://www.onemint.com/suggest-a-topic/
Day 19 (January 3) subscription figures:
Category I – Rs. 435.18 crore as against Rs. 450 crore reserved
Category II – Rs. 624.33 crore as against Rs. 600 crore reserved
Category III – Rs. 650.35 crore as against Rs. 750 crore reserved
Category IV – Rs. 1,074.10 crore as against Rs. 1,200 crore reserved
Total Subscription – Rs. 2,783.96 crore as against total issue size of Rs. 3,000 crore
Thanks for daily numbers, it is really helpful.
Would you advise for this bond now or are we still expecting more bonds being launched with rate of around 9% this year?
Will I get full allotment for category 4 if I apply on Monday?
Hi Akhilesh,
I don’t know what would be the rate of interest with the NHAI bonds, so I’ll be able to take a call only after that. I am not sure whether this issue will remain open till that time or not. Let’s see.
If you apply for these bonds on Monday under Category IV, you’ll get full allotment.
Akhilesh, The coupon rates of NHAI will not be higher than this. If you are only waiting for coupon rates and otherwise fine with any of the two, please go ahead. Looking at the TFB issues in last 2 years, I am quite sure about it. Particularly 10 year coupon rates of IIFCL is good. More over NHAI will be having only 10 and 15 Years terms.
Thanks Shiv & George for your valuable suggestions.
You are welcome Akhilesh!
The NHAI Tax free bonds are trading at reasonable price today? Do you have any update on coupon rates for new issue. The sudden interest in old bond gives me an impression that the coupon rates will not be all that high.
Hi George,
NHAI N2 bonds are trading at a yield of 8.54% as of today, which is close to 8.65% p.a. IRFC is offering to the retail investors and higher than 8.40% p.a. for non-retail investors. So, I think it is trading more or less at a fair value.
I have no idea what would be the rates for its new issue but I agree with you that it seems the rates would be lower.
Yes I agree. 15 years NHAI was trading on par with IRFC rates. Both 10 years and 15 Years went up by 1 %. It is also true that NHAI & PFC first issue have the advantage that Non-retail customers also benefit because of no step down here. I also observed that the prediction on GSec and the interest for the same upswing which also brought more interest for the bonds. I expect NHAI to be on par with IRFC.
Day 20 (January 6) subscription figures:
Category I – Rs. 435.18 crore as against Rs. 450 crore reserved
Category II – Rs. 626.73 crore as against Rs. 600 crore reserved
Category III – Rs. 668.33 crore as against Rs. 750 crore reserved
Category IV – Rs. 1,114.69 crore as against Rs. 1,200 crore reserved
Total Subscription – Rs. 2,844.92 crore as against total issue size of Rs. 3,000 crore
Hi Shiv,
I have a query about Tax free bonds applied through ASBA. I am expecting 50000 to be refunded from NHB and my current balance in account is also 50000. While i have applied for 1 lac rs IIFCL bonds, so if NHB dont refunds before the date IIFCL block the amount in bank would my order get cancelled or a 50000 rs IIFCL bonds would block 50000 only and later issue me 50000 bonds on allotment date ?
Hi Rahul,
I don’t think you can re-use the blocked amount of Rs. 50,000 you used for NHB. As you have only Rs. 50,000 in your bank account at present, you can use only that for your IIFCL application. This is what my understanding is about ASBA.
Hi Shiv,
I think i was not clear. Total amount in my bank is Rs 250000 and i have placed NHB Rs 200000 order, so 200000 is blocked for NHB bonds and as you said in NHB blog that NHB would give 75% allocation on order placed if we have applied on 30th Dec. So I have placed Rs 100000 IIFCL order assuming Rs 50000 would get unblocked + Rs 50000 is free amount in my bank. So my question is Rs 100000 order would get canceled if NHB didn’t unblock the Rs 50000 or IIFCL only block Rs 50000 for my Rs 100000 order ?
Hi Rahul,
Your query was clear to me and I answered your query considering this only. Also, I assumed that you are using online ASBA facility provided by your bank to apply for bonds in these issues.
But, if you’ve used physical application form for this, I think your bank would reject your application as Rs. 2 lakh is already blocked for NHB and your bank won’t allow you to get Rs. 3 lakh blocked when there is only Rs. 2.5 lakh balance is available.
Day 21 (January 7) subscription figures:
Category I – Rs. 435.18 crore as against Rs. 450 crore reserved
Category II – Rs. 627.76 crore as against Rs. 600 crore reserved
Category III – Rs. 682.64 crore as against Rs. 750 crore reserved
Category IV – Rs. 1,143.70 crore as against Rs. 1,200 crore reserved
Total Subscription – Rs. 2,889.28 crore as against total issue size of Rs. 3,000 crore
Hi Shiv
As on to-day in Category I only Rs. 435.18 crore filled against Rs. 450 crore reserved.
And I am only able to apply in Category II which is oversubscribed by Rs.27.76 crore.
As on to-day Category I , III , and IV are still open.[ Not fully subscribed] If i apply to-morrow in Category II , do you think i get the full allotment in that ?
Hi Paresh,
It is a very tricky subscription data for the Category II investors to get 100% allotment. There is a high probability that you’ll get full allotment, but I cannot assure you of the same.
Also, as requested earlier also, please avoid such kind of queries here on this forum. You can avail of our services for such queries.
Day 22 (January 8) subscription figures:
Category I – Rs. 435.18 crore as against Rs. 450 crore reserved
Category II – Rs. 627.98 crore as against Rs. 600 crore reserved
Category III – Rs. 710.68 crore as against Rs. 750 crore reserved
Category IV – Rs. 1,165.73 crore as against Rs. 1,200 crore reserved
Total Subscription – Rs. 2,939.57 crore as against total issue size of Rs. 3,000 crore
Dear Shiv,
IIFCL bonds issued in October 2013 have pathetic volumes. What could be the reason for this ? Can the same happen for bonds of this issue ?
Thanks
Dear TCB,
It is natural for an issue with lower coupon rates and lower subscription figures to generate lower trading volumes. IIFCL Tranche I could generate only Rs. 1,233.74 crore during its subscription period. If I want to invest in the IIFCL bonds, it is natural for me to subscribe to the current issue which is closing tomorrow rather than buying Tranche I bonds from the secondary markets.
Day 23 (January 9) subscription figures:
Category I – Rs. 449.18 crore as against Rs. 450 crore reserved
Category II – Rs. 632.52 crore as against Rs. 600 crore reserved
Category III – Rs. 717.40 crore as against Rs. 750 crore reserved
Category IV – Rs. 1,187.46 crore as against Rs. 1,200 crore reserved
Total Subscription – Rs. 2,986.56 crore as against total issue size of Rs. 3,000 crore
NHAI Tax-Free Bonds issue opens January 15th. Coupon Rates – 8.52% for 10 years and 8.75% for 15 years. 20-year option is not there. It is rated ‘AAA’ and closes on February 5, 2014.
Day 24 (January 9) subscription figures:
Category I – Rs. 474.18 crore as against Rs. 450 crore reserved
Category II – Rs. 633.02 crore as against Rs. 600 crore reserved
Category III – Rs. 741.63 crore as against Rs. 750 crore reserved
Category IV – Rs. 1,206.44 crore as against Rs. 1,200 crore reserved
Total Subscription – Rs. 3,055.27 crore as against total issue size of Rs. 3,000 crore
HNIs and Retail Investors will get full allotment. Category II investors will get allotment worth Rs. 601.93 crore as against 633.02 subscription and Rs. 600 crore reserved.
Dear shiv.
when should be get recent HUDCO , IIFCL & NHB Allotment
& Approx Listing Dates of the above 3 issue…
Hi Rohit,
I’ve responded to your query on the NHB post.
I hv applied for IIFCL cat.IV, series I on 10th jan. Wt is my allotment possibilities?
Hi Tushar,
All retail investors in the IIFCL issue will get full allotment.
Hi Shiv – When can we expect the allotment to happen ?
Hi Aditya,
I think the allotment process should start happening either from Tuesday or Wednesday.
Hi Shiv
Any updates on when allotment is going to completed? . I have applied through ASBA about 1 month back and still no allotment .
Hi Amol,
I think it should start happening today onwards.
I got the bonds alloted to my Demat account yesterday 10.30 pm. Got 100% allotment
That’s Great!
Hi Shiv, I got full allotment credited to my demat account yesterday. I thank you for all the help that your platform provides for my debt investment decisions. Yours is a very creditable mission.
Thanks a lot Rama for your kind words! 🙂
Hi Shiv,
which & when the next TFB issue opens? Reqeust, inforamtion. This site gives lot of useful and important input. Many thanks for your untiring efforts
Best wishes
Anand
Thanks Anand for your kind words!
Either IIFCL or IREDA should come up with their tax free bond issues next. It will be the third issue by IIFCL. Exact dates & coupon rates are not known as yet.
IIFCL tax-free bonds got listed on the BSE today, opened at Rs. 1,012, touched a low of Rs. 1,010, a high of Rs. 1,017.50 and closed at Rs. 1,016.95.
Here are the BSE codes for the same:
8.66% 10-year bonds – BSE Code – 961820
8.73% 15-year bonds – BSE Code – 961821
8.91% 20-year bonds – BSE Code – 961822
Deemed date of allotment has been fixed as January 22, 2014. Interest will be paid on January 22nd every year.
Hi Shiv,
I have applied through SBI-ABSA. Money was debited on 22-Jan, but bonds were not credited to demat account sofar. Where will I get the allotment data and whom should I contact? Please help
Hi Ravi,
Is it 22nd January or 22nd December?
Hi Shiv,
Its 22-Jan-2014.
But, the IIFCL issue got closed on January 10th itself. Did you invest in any other issue – NHAI or IRFC?
Hi Shiv
While applying for IIFCL tax free bonds , IIFCL had deducted TDS on interest on application money till date of allotment. Till date , i havent received any Form16A nor is it updated in my 26AS statement.
Do you know who should be approached to get this TDS details? Appreciate your help
Regards
Ramadas
Hi Ramadas,
I think the investors should wait for some more time to get the TDS details updated in Form 26AS. If it still doesn’t get updated, then you need to write to the Registrar seeking TDS details.
Thanks Shiv. I will probably wait for another month till July-1 then
Regards
Ramadas
Dear Shiv,
I got allotted 10 nos. IIFCL 8.91% Tax-Free Bonds Tranche II – December 2013. But I can not sell these on secondary market. My broker told me these bonds are still not listed. Please help, I want sell these bond ASAP.
Hi Tushar,
As these bonds are definitely listed, please ask your broker to search these bonds on his BSE platform with ‘961822’ as the code. There is huge demand for such bonds and you’ll face no difficulty in selling yours.
Shiv,
I checked in Listed security section in BSE website. There are no listing for these bonds. I found my another bonds, and sold successfully. Could you please help me. How can I know the possible listing date of my Bonds? Data are given below.
Issuer Name : IIFCL-8.66%-22-1-24-NCD
Security Code : 961820
ISIN No : INE787H07354
Listing date is January 24, 2014. Here is the link to the bonds you hold:
http://www.bseindia.com/NewStockReach/StockReach_Debt.aspx?scripcode=961820
I am trying to sell IIFCL Tax Free Bonds Dec 13 at ICICIdirect. but the website is not accepting the order saying the the price (1200) is beyond acceptable norm – check the stock list! I recently sod at 1250. what is wrong? Is the bond not being traded currently?
Since Aug 8, 2016, orders for sale for IIFCL Dec 13 issue TFB are not being accepted at ICICIdirect. what is the problem? is there an alternative?