REC is the third company that I’m going to write about that has issued a second tranche of tax free bonds. PFC and HUDCO were the first two.
REC had also released the first tranche of its tax free bonds earlier and like the other companies, it has lowered the interest rates on its second tranche due to the lowering of the interest rates.
Here are the issue details from the second tranche of REC tax free bonds.
|Option||Tranche- II Series 1||Tranche- II Series 2|
|Tenor||10 years||15 years|
|Minimum Investment||Rs. 5,000||Rs. 5,000|
|Coupon Rate for Retail Investors||7.38%||7.54%|
Credit Rating of REC Tax Free Bonds
CRISIL has given this issue its highest ‘CRISIL AAA’ rating, and CARE has also given this issue its highest ‘CARE AAA’ rating.
Open and Close Date of REC Tax Free Bonds
The issue opens on February 25th 2013, and closes on March 15th 2013.
Listing of the Bonds
The bonds will list on both the NSE and the BSE, and will start trading shortly after their issue.
Dematerialization and Physical Form
If you have a Demat account then you can buy these bonds in Demat account but it is not necessary to have one to own these since you can also subscribe to these bonds in the paper form. You can only trade in them in Demat form though.
Security and Safety
I feel that all these bonds coming out are fairly secure in nature but it is always good to spread around your money and not invest all of it in just one issue. Currently, there are 4 issues open so you can split your money in two or three of them.
I’ll keep this post short because there is not a lot new that I have to say other than what I’ve already written in other reviews but since a lot of people read one and not the others, I’ll just repeat that since interest rates are coming down, and these bonds may not be in existence next year onwards, it makes sense for people in the 30% tax bracket to have these as part of your portfolio.
If you have any other questions, please leave a comment, and I’ll answer them.