IFCI Long Term Infrastructure bond are out for 2011 for 80 CCF savings

September 25, 2011   ·   4 Comments

Citizens have an option of up to Rs. 20,000 in long term infrastructue and get tax benefit on that amount under Section 80CCF.  This was made additional to the Rs 1 Lakh under Section 80C a year back. With a view to attracting long-term investments for the www.stockssavvy.comsector, the government has allowed Industrial Finance Corporation of India (IFCI), Life Insurance Corporation of India (LIC), Infrastructure Development Finance Company (IDFC) and India Infrastructure Finance Company (IIFCL) and certain non-banking financial companies (NBFCs) to issue tax-saving bonds during the current fiscal.

The volume of issuance during the financial year shall be restricted to 25% of the incremental infrastructure investments made by the issuer during 2010-11. Last fiscal a host of companies like IFCI, REC and IDFC had raised about Rs8,000 crore through issue of tax-savings meaning this year the the bonds will look to gather Rs. 10,000 crore from the market. The government proposes to double in infrastructure to $1 trillion during the 12th Five Year Plan (2012-17).

IFCI Long Term Infrastructure bond covered under 80CCF

IFCI is the first company to come out with a long term infrastructure bond issue this year.

The issue opens on 21 September and closes on 14 November, 2011. The tenure ranges from 10 to 15 years and interest rate ranges from 8.5% to 8.75%.

There are 4 options with this series:

Option 1:  Tenure is 10 years. Interest Rate at 8.5% and interest will be paid at maturity.

Option 2: Tenure is 10 years. Interest Rate at 8.5% and interest will be paid annually.

Option 3: Tenure is 15 years. Interest Rate at 8.75% and interest will be paid at maturity.

Option 4: Tenure is 15 years. Interest Rate at 8.75% and interest will be paid annually.

Apart from this IFCI comes with private place bonds which are of HNI’s to park their money for long term. The details are:

IFCI TIER II SUBORDINATE BONDS –SERIES III

 

Issuer IFCI Limited (“the Issuer”)
Offering 1,50,000 Nos. Subordinated, Unsecured, Redeemable, Non-Convertible Bonds Series – III of Rs.10,000/- each aggregating to Rs.150 crore with a green-shoe option to retain over-subscription
Type Private Placement basis
Instrument Subordinated, Unsecured, Redeemable, Non-Convertible Bonds – Series III
Eligible Investors Resident Individuals/ HUFs and Domestic Non-Individual Entities.
Rating ‘BWR AA–’ by Brickwork Ratings India Pvt. Limited CARE ‘A’ by CARE Ratings (Credit Analysis & Research Ltd.) ‘LA’ by ICRA Limited
Face Value Rs.10,000/- per bond
Minimum Application Rs.1,00,000/- (i.e. 10 Bonds of Rs.10,000 each)
Application in multiples of Rs.10,000/- (i.e.1 Bond)
Maximum Application Rs.50 crore (Rupees Fifty crore) (50,000 Bonds of Rs.10,000/- each)
Options for Subscription

I

II

III

IV

Frequency of Interest Payment

Cumulative

Annual

Annual

10.75% p.a.
Annual

Eligible investors
( FIIs, NRIs, OCBs and Foreign Nationals are not permitted to apply in this Issue)

Individuals/HUFs for aggregate application amount upto Rs. 5 lakh(Rupees Five lakh only)

Annual Interest- All eligible investors (all other entities including Individuals/ HUFs whose aggregate application amount is more than Rs. 5 lakh)

Coupon (% p.a.)

10.60 % p.a.(Annual compounding)

10.60 % p.a

10.50 % p.a.

10.75% p.a.

Tenor

10 (Ten) years

10 (Ten) years

10 (Ten) years

15 (Fifteen) years

Call option

At the end of 7 (seven) years from the Deemed date of allotment

At the end of 7 (seven) years from the Deemed date of allotment

At the end of 7 (seven) years from the Deemed date of allotment

At the end of 10 (ten) years from the Deemed date of allotment

Deemed Date of Allotment October 31,2011
Security Unsecured
Nature of indebtedness and ranking The Bonds are Unsecured Redeemable Non-Convertible and Taxable Bonds in the nature of Promissory Notes, the claims of its investors being subordinate to the claims of all other creditors.
Trustee Axis Trustee Services Limited
Listing Proposed to be listed on BSE
Depositories National Securities Depository Ltd. and Central Depository Services (India) Ltd.
Registrars Link Intime India Pvt. Ltd.
Issuance & Trading In dematerialised mode only
Mode of Interest Payment / Redemption RTGS/ECS/At Par Cheques/Demand Drafts
Issue Schedule Issue Open Date : September 5,2011
Issue Close Date : October 10, 2011
The issuer would have the right to pre-close the issue or extend the closing date by giving 1 day notice to the Arrangers

 

Verdict: We think it is too early to invest in long term infrastructure bond for 2011. IFCI itself came out with multiple tranches last year and there will be more companies that will be coming out with these bonds. Interest rate may just go few basis points higher in the coming months for these bonds. The closing date for this issue is 14 November which is two months away so suggest wait till the last few days anyways. For people who are looking to park their funds in debt instruments , IFCI TIER II SUBORDINATE BONDS –SERIES III  seems to be a good option with interest rate of more th

Rajesh Singla

Rajesh is the founder & CEO of Stockssavvy, Stocks analyst,financial advisor by choice,software engineer by fate,biker,gamer,cricket lover n enthusiastic person. He believes in doing things not just to get by but to get Ahead...

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  • Asurpuriya

    For Application forms Contact Amit Surpuriya 9850873688 Pune

  • Vishwanathrao1980

    IFCI Offer Closes on 16th Jan 2012, I recently came across a blog that shares general information on Tax Saving Infrastructure Bonds http://www.infrastructurebond.in

  • Asurpuriya

    For Application of Infrastructure Bonds – Contact – Amit Surpuriya – 9850873688 – Pune

    KSHITIJ FINANCIAL SERVICES
    Mutual Funds | Infrastructure Bonds | 54EC Capital Gain Bonds | Tax Planning | Company Fixed Deposit | Debentures

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