After getting the approval of raising up to Rs 30,000 crore (Rs 300 billion) through issuance of tax-free bonds this financial year, infrastructure finance companies, Housing and Urban Development Corporation (HUDCO) and Power Finance Corporation (PFC), have thrown open their subscriptions under the private placement route.
While PFC aims to raise Rs 150 crore (Rs 1.5 billion) through the issue, HUDCO has come up with a base issue size of Rs 100 crore (Rs 1 billion) for the first tranche. Both issuances have open greenshoe options and companies can retain the oversubscription.
"The initial response has not been that good because of current market conditions and tight liquidity. Lesser profitability will mean lower investment appetite," said senior official of a Mumbai-based brokerage firm. The Central Board of Direct Taxes has given HUDCO and PFC the permission to raise Rs 5,000 crore (Rs 50 billion) each this financial year.
Bonds can be placed publicly as well as privately. The coupon rate on these bonds is not taxable and should not be less than 100 basis points lower than the yield on government securities of the same residual maturity, as reported by Fixed Income Money Market and Derivatives Association (FIMMDA)
How to gain from property sale
PFC-like body mooted for telecom financing
Corruption? Railways tops, banks are 2nd, says CVC
Indo-Pak trade high on hope, low on execution
Top 20 job-friendly Diploma courses