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IDBI launches second tranche of Flexibonds-10

Term lender Industrial Development Bank of India (IDBI) on Monday launched the second tranche of its Flexibonds-10 series for 2000-01 to raise up to Rs 6 billion.

The issue has a target of Rs 3 billion ($64.54 million), with an option to retain excess bids up to a further Rs 3 billion, IDBI said in a statement.

The issue will remain open up to March 2.

IDBI said the bonds carry an "AAA" rating from domestic rating agencies ICRA Ltd and Credit Rating Information Services of India Ltd and "Ind AAA" by Fitch Ratings India Pvt Ltd, indicating highest safety with regard to timely payment of principal and interest.

The issue offers four options - regular income, growing interest, money multiplier, and tax savings, the firm said.

The regular income bond will give an annualised return of 1 per cent with the option to receive interest payments either half yearly or annually. The bonds have a five-year maturity.

The growing interest bond has a tenor of five years with interest rates rising from 10.50 per cent in the first year to 10.75 per cent in the fourth and fifth years. The bonds offer a yield to maturity of 10.65 per cent for five years.

The money multiplier bond will offer the investor Rs 10,000 after six years and seven months for an initial investment of Rs 5000, giving a yield to maturity of 11.10 per cent.

The infrastructure bond is a tax-saving bond with two options: annual interest and cumulative interest. The former offers an interest rate of 10.50 per cent payable annually for three years while the latter offers a yield to maturity of 10.63 per cent payable after three years and four months.

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