IDFC Tax-Free Infra Bonds Public issue opens today

Nksagar-Sagar Media - New Delhi -30 Sept 2010:
Infrastructure Development Finance Company Ltd., or IDFC, has announced a public issue of long term infrastructure bons to raise an amount of up to Rs 3,400 Crore,in one or more tranches,in the fiscal year 2010 -11. On Monday launched the country's first long-term tax-free infrastructure bonds having a face value of Rs.5,000 each .The issue proceeds are proposed to be used for the company's infrastructure lending activities.

Managing Director and Chief Executive Rajiv Lall said these long-term bonds would hit the market on September 30 (Thursday) and could be subscribed up to Monday October 18,or earlier,as may be decided by the Board. The bonds would come in four series carrying a maximum of 8 per cent coupon.

IDFC is also looking to raise '3,000 crore through external commercial borrowings (ECBs) in the current fiscal, Rajiv Lall, managing director and chief executive officer, told reporters in Mumbai on Monday.

These long-term bonds with minimum investment limit has been fixed at '10,000. Citigroup Global Markets India Pvt. Ltd, Enam Securities Pvt. Ltd, Kotak Mahindra Capital Co. Ltd and IDFC Capital Ltd are the lead managers.

These bonds, with the highest rating-LAAA—from Icra, could be bought back or redeemed after the five-year lock-in period or could be traded on the bourses, he said. On the conservative way of fixing the yield, Lall said, "Our yield rate is capped at par with the interest rate on government securities and hence cannot offer a yield rate that is above what the 10-year Gilts offer. Also, our objective is to encourage the average retail investors who are salaried as it is a tax-free bond, to invest in these bonds."

At the BSE, shares of IDFC are now trading at Rs.200.25, down by 2.60% from the previous close.The 10-year bonds, to be listed on both the Bombay Stock Exchange and the National Stock Exchange, are trade able after a lock-in period of five years. The bonds will be issued in four series--the first two will offer 8%, while the other two will offer 7.5% per annum with a buyback option.