8.88% IRFC vs. 8.88% REC Tax-Free Bonds – February 2014

by Shiv Kukreja on February 27, 2014

in Investments

This post is written by Shiv Kukreja, who is a Certified Financial Planner and runs a financial planning firm, Ojas Capital in Delhi/NCR. He can be reached at skukreja@investitude.co.in

Three tax free bond issues are getting launched from the coming Friday i.e. 28th of this month. These are from IRFC, REC and HUDCO. While IRFC and REC issues are ‘AAA’ rated, HUDCO issue is ‘AA+’ rated. As most of you are aware by now, issues which carry higher ratings also carry lower coupon rates. So, it is natural for the IRFC and REC issues to offer lower rate of interest.

While HUDCO has been able to offer 8.98% as its highest annual interest rate, the same stands at 8.88% for the other two issues. As the HUDCO issue is of Rs. 285 crore only, which is very small by its standards, I expect the issue to get oversubscribed on the first day itself. This makes me feel like that the investors would be more interested in a comparison between the IRFC and the REC issues. So, I would like to cover such a comparison in this post.

Size of the Issues – IRFC issue is bigger in size with the company planning to raise approximately Rs. 2,916.88 crore this time around, whereas REC has recently got the authorization to raise another Rs. 1,059.40 crore. Both the companies have reserved 40% of their respective issue sizes for the retail investors.

Closing Dates of the Issues – REC issue is scheduled to close on March 14, whereas IRFC has decided to keep it extremely short to close it on March 7.

20-Year Option – REC will offer 8.86% per annum for the 20-year option, whereas the IRFC issue will not carry the 20-year option. For the other two durations, both companies are offering the same coupon rates.

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Ratings of the Issues – As mentioned above also, both these issues are ‘AAA’ rated. While the IRFC issue is rated by CRISIL, ICRA and CARE, the REC issue is also rated by these three rating agencies in addition to India Ratings as well.

Investor Categories & Allocation Ratio – As always, the investors have been classified in the following four categories and each category will have certain percentage of the issue sizes reserved during the allocation process:

Category I – Qualified Institutional Bidders (QIBs) – IRFC – 10% of the issue i.e. Rs. 291.69 crore is reserved; REC – 10% of the issue i.e. Rs. 105.94 crore

Category II – Non-Institutional Investors (NIIs) – IRFC – 30% of the issue i.e. Rs. 875.06 crore is reserved; REC – 25% of the issue i.e. 264.85 crore is reserved

Category III – High Net Worth Individuals including HUFs – IRFC – 20% of the issue i.e. Rs. 583.38 crore is reserved; REC – 25% of the issue i.e. 264.85 crore is reserved

Category IV – Retail Individual Investors (RIIs) – IRFC – 40% of the issue i.e. Rs. 1,166.75 crore is reserved; REC – 40% of the issue i.e. Rs. 423.76 crore is reserved

As always, allotment will be made on a first come first serve (FCFS) basis in each of the investor categories.

NRI/FPI/QFI Investment – Both the companies have allowed Non-Resident Indians (NRIs) to participate in their respective issues, on a repatriation basis as well as on a non-repatriation basis. Qualified Foreign Investors (QFIs) category has been recently merged with the FIIs category to form a new category termed as Foreign Portfolio Investors (FPIs). FPIs have also been allowed to invest in these bonds now.

Listing – IRFC has decided to get its bonds listed both on the National Stock Exchange (NSE) as well as on the Bombay Stock Exchange (BSE), whereas REC bonds will get listed only on the BSE.

Interest on Application Money & Refund – Both the companies will pay interest to the successful allottees on their application money at the applicable coupon rates. Unsuccessful allottees will get interest @ 5% per annum on their refund money.

Interest Payment Dates – IRFC will pay the due interest on April 15th every year, whereas REC has fixed its interest payment date to be December 1st every year.

Though it is very difficult to make out which issue is superior between the two, I would personally prefer the IRFC issue due to its business fundamentals, bigger issue size and listing of its bonds on both the stock exchanges. But, if you have already invested with either of these companies earlier, then I think it would be better to go for the other company’s bonds in order to diversify your bond portfolio.

I would also like to wait for the NHB issue to declare its coupon rates sometime early next week. If NHB’s interest rates are higher, then I would rather prefer to go with the subsidiary of the central bank rather than these public sector enterprises.

{ 82 comments… read them below or add one }

Shiv Kukreja March 1, 2014 at 2:12 PM

Day 1 (February 28) subscription figures for IRFC Tranche II:

Category I – Rs. 45 crore as against Rs. 291.69 crore reserved
Category II – Rs. 33.69 crore as against Rs. 875.06 crore reserved
Category III – Rs. 63.32 crore as against Rs. 583.76 crore reserved
Category IV – Rs. 96.62 crore as against Rs. 1,166.75 crore reserved
Total Subscription – Rs. 238.63 crore as against total issue size of Rs. 2,917.26 crore

Day 1 (February 28) subscription figures for REC Tranche II:

Category I – Rs. 20 crore as against Rs. 105.94 crore reserved
Category II – Rs. 24.72 crore as against Rs. 264.84 crore reserved
Category III – Rs. 19.40 crore as against Rs. 264.84 crore reserved
Category IV – Rs. 90.46 crore as against Rs. 423.76 crore reserved
Total Subscription – Rs. 154.58 crore as against total issue size of Rs. 1,059.38 crore

Day 1 (February 28) subscription figures for HUDCO Tranche III:

Category I – No subscription as against Rs. 28.58 crore reserved
Category II – Rs. 2.72 crore as against Rs. 28.58 crore reserved
Category III – Rs. 6.20 crore as against Rs. 57.76 crore reserved
Category IV – Rs. 53.82 crore as against Rs. 171.48 crore reserved
Total Subscription – Rs. 62.74 crore as against total issue size of Rs. 286.40 crore

Reply

KS March 1, 2014 at 3:21 PM

Shiv, Thanks for this update! Hoping to put some money in these issues when the Tata Cap NCDs redumption amount gets disbursed on 6-Mar-14.

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Shiv Kukreja March 2, 2014 at 3:29 PM

Great !!

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Pinaki March 1, 2014 at 10:37 PM

Shiv,

From subscription status, it seems, like me, others too are out of money at the end of financial year :).

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Shiv Kukreja March 2, 2014 at 3:40 PM

Hi Pinaki,
There is no doubt that the investors have exhausted most of their investment surplus in the earlier issues, but investors still have plenty to choose from as there are six issues currently open and two are in the pipeline. I think they are going to finalize their investment decisions once NHB and/or NTPC rates get announced.

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Shiv Kukreja March 3, 2014 at 7:35 PM

Day 2 (March 3) subscription figures for IRFC Tranche II:

Category I – Rs. 95 crore as against Rs. 291.69 crore reserved
Category II – Rs. 62.15 crore as against Rs. 875.06 crore reserved
Category III – Rs. 84.21 crore as against Rs. 583.76 crore reserved
Category IV – Rs. 183.83 crore as against Rs. 1,166.75 crore reserved
Total Subscription – Rs. 425.19 crore as against total issue size of Rs. 2,917.26 crore

Day 2 (March 3) subscription figures for REC Tranche II:

Category I – Rs. 20 crore as against Rs. 105.94 crore reserved
Category II – Rs. 28.34 crore as against Rs. 264.84 crore reserved
Category III – Rs. 35.47 crore as against Rs. 264.84 crore reserved
Category IV – Rs. 173.10 crore as against Rs. 423.76 crore reserved
Total Subscription – Rs. 256.91 crore as against total issue size of Rs. 1,059.38 crore

Day 2 (March 3) subscription figures for HUDCO Tranche III:

Category I – No subscription as against Rs. 28.58 crore reserved
Category II – Rs. 2.96 crore as against Rs. 28.58 crore reserved
Category III – Rs. 11.47 crore as against Rs. 57.76 crore reserved
Category IV – Rs. 95.55 crore as against Rs. 171.48 crore reserved
Total Subscription – Rs. 109.98 crore as against total issue size of Rs. 286.40 crore

Reply

Raj March 4, 2014 at 3:03 PM

Shiv, what happens if IRFC bond is not filled upto its base size 1500 crore. Will it be refunded.

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Shiv Kukreja March 4, 2014 at 10:48 PM

Hi Raj,
IRFC can retain whatever amount it is able to raise during the offer period as there is no stipulated minimum subscription amount for this issue.

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Ikjot March 4, 2014 at 9:38 PM

Hi Shiv,
Can we have today’s subscription figuers please?

Thanks

Reply

Shiv Kukreja March 4, 2014 at 10:54 PM

Day 3 (March4) subscription figures for IRFC Tranche II:

Category I – Rs. 95 crore as against Rs. 291.69 crore reserved
Category II – Rs. 70.95 crore as against Rs. 875.06 crore reserved
Category III – Rs. 102.05 crore as against Rs. 583.76 crore reserved
Category IV – Rs. 237.96 crore as against Rs. 1,166.75 crore reserved
Total Subscription – Rs. 505.95 crore as against total issue size of Rs. 2,917.26 crore

Day 3 (March 4) subscription figures for REC Tranche II:

Category I – Rs. 45 crore as against Rs. 105.94 crore reserved
Category II – Rs. 54.30 crore as against Rs. 264.84 crore reserved
Category III – Rs. 69.33 crore as against Rs. 264.84 crore reserved
Category IV – Rs. 221.09 crore as against Rs. 423.76 crore reserved
Total Subscription – Rs. 389.72 crore as against total issue size of Rs. 1,059.38 crore

Day 3 (March 4) subscription figures for HUDCO Tranche III:

Category I – No subscription as against Rs. 28.58 crore reserved
Category II – Rs. 4.14 crore as against Rs. 28.58 crore reserved
Category III – Rs. 13.03 crore as against Rs. 57.76 crore reserved
Category IV – Rs. 117.87 crore as against Rs. 171.48 crore reserved
Total Subscription – Rs. 135.04 crore as against total issue size of Rs. 286.40 crore

Reply

Shiv Kukreja March 5, 2014 at 5:40 PM

‘AAA’ rated NHB tax free bonds issue is getting opened on March 7th with the following coupon rates – 8.50% p.a. for 10 years, 8.93% p.a. for 15 years and 8.90% p.a. for 20 years. Issue size is Rs. 1,000 crore and will get closed on March 18th. NRIs cannot apply in this issue.

Reply

Shiv Kukreja March 5, 2014 at 11:03 PM

Day 4 (March 5) subscription figures for IRFC Tranche II:

Category I – Rs. 95 crore as against Rs. 291.69 crore reserved
Category II – Rs. 135.17 crore as against Rs. 875.06 crore reserved
Category III – Rs. 142.70 crore as against Rs. 583.76 crore reserved
Category IV – Rs. 281.50 crore as against Rs. 1,166.75 crore reserved
Total Subscription – Rs. 654.37 crore as against total issue size of Rs. 2,917.26 crore

Day 4 (March 5) subscription figures for REC Tranche II:

Category I – Rs. 45 crore as against Rs. 105.94 crore reserved
Category II – Rs. 58.18 crore as against Rs. 264.84 crore reserved
Category III – Rs. 86.10 crore as against Rs. 264.84 crore reserved
Category IV – Rs. 266.10 crore as against Rs. 423.76 crore reserved
Total Subscription – Rs. 455.38 crore as against total issue size of Rs. 1,059.38 crore

Day 4 (March 5) subscription figures for HUDCO Tranche III:

Category I – No subscription as against Rs. 28.58 crore reserved
Category II – Rs. 6.49 crore as against Rs. 28.58 crore reserved
Category III – Rs. 14.50 crore as against Rs. 57.76 crore reserved
Category IV – Rs. 139.76 crore as against Rs. 171.48 crore reserved
Total Subscription – Rs. 160.75 crore as against total issue size of Rs. 286.40 crore

Reply

Shiv Kukreja March 6, 2014 at 7:21 PM

IRFC issue closing date has been extended to close on March 14th.

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viral March 6, 2014 at 10:44 PM

I need your advice.
I have approx. 5,00,000 in tax free bonds of REC having less than 8.5% interest (approx. 7.7%) with 10 years tenure. In present time I can see that current tax free bonds provide around 8.8% for 15 years. So I am thinking of selling that bond that are having 7.7% interest (10 years) and invest in current 8.8% (15 years) so that I will gain something more.
Please suggest your views.

Reply

Shiv Kukreja March 7, 2014 at 1:02 PM

Hi Viral,
Sorry, but I cannot take individual queries here on this forum. Still I would say that you should go for those bonds which give you the highest yield to maturity (YTM).

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George March 11, 2014 at 10:18 AM

Hi Viral.
Selling 7.7% bond and investing in 8.8 % bonds. You need to be very careful. The 7.7% bond have a step down of 50 Basis points while selling since you are a retail investor. You will also end up paying the brokerage. If you were to do this, you will end up getting less than 7.7% for the bonds which buy considering of additional Rs 50 for losing the retail benefit in existing bond. Just to demonstrate , you may get around Rs 900 for the bond you are holding. So you will end up buying around 440 bonds with 8.8%. Do your maths as Shiv mentioned YTM plays key.

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Paresh Patel March 7, 2014 at 4:49 AM

Please send me the details of daily subscription of recent HUDCO / IRFC / REC please

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Shashwat March 7, 2014 at 10:25 AM

How can one apply for Physical Bonds, some one who is not having Demat account.?

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Shiv Kukreja March 7, 2014 at 8:21 PM

Hi Shashwat,

To apply these bonds in physical form, you need to approach a broker/service provider like us. We (Ojas Capital), as a brokerage firm, help investors apply for these bonds on a national level. Here is the procedure to apply it in the physical form:

* Download the physical form from the following link – http://www.akstockmart.com/akintra/BA/DNLDFORM.aspx?refno=dU6gu20m1nc= and duly fill it.
* Mail us the scanned copy of your duly filled form and we’ll do the bidding on the stock exchange, which is mandatory before banking the application form.
* We’ll let you know the BSE/NSE bidding code, which you’ll be required to manually write on the application form.
* After that, if possible, we’ll get the form picked from your place or you can courier the form to us, along with your self-attested copies of PAN card, address proof and a cancelled cheque.

For any clarification or further info, you can contact me at +919811797407 or mail me at skukreja@investitude.co.in

Reply

Shiv Kukreja March 7, 2014 at 7:20 PM

Day 5 (March 6) subscription figures for IRFC Tranche II:

Category I – Rs. 95.01 crore as against Rs. 291.69 crore reserved
Category II – Rs. 135.37 crore as against Rs. 875.06 crore reserved
Category III – Rs. 152.50 crore as against Rs. 583.76 crore reserved
Category IV – Rs. 322.21 crore as against Rs. 1,166.75 crore reserved
Total Subscription – Rs. 705.08 crore as against total issue size of Rs. 2,917.26 crore

Day 5 (March 6) subscription figures for REC Tranche II:

Category I – Rs. 45 crore as against Rs. 105.94 crore reserved
Category II – Rs. 70.56 crore as against Rs. 264.84 crore reserved
Category III – Rs. 98.80 crore as against Rs. 264.84 crore reserved
Category IV – Rs. 306.02 crore as against Rs. 423.76 crore reserved
Total Subscription – Rs. 520.38 crore as against total issue size of Rs. 1,059.38 crore

Day 5 (March 6) subscription figures for HUDCO Tranche III:

Category I – No subscription as against Rs. 28.58 crore reserved
Category II – Rs. 7.18 crore as against Rs. 28.58 crore reserved
Category III – Rs. 16.30 crore as against Rs. 57.76 crore reserved
Category IV – Rs. 157.06 crore as against Rs. 171.48 crore reserved
Total Subscription – Rs. 180.54 crore as against total issue size of Rs. 286.40 crore

Reply

Shiv Kukreja March 8, 2014 at 12:13 AM

Day 6 (March 7) subscription figures for IRFC Tranche II:

Category I – Rs. 95.01 crore as against Rs. 291.69 crore reserved
Category II – Rs. 147.28 crore as against Rs. 875.06 crore reserved
Category III – Rs. 171.87 crore as against Rs. 583.76 crore reserved
Category IV – Rs. 360.50 crore as against Rs. 1,166.75 crore reserved
Total Subscription – Rs. 774.66 crore as against total issue size of Rs. 2,917.26 crore

Day 6 (March 7) subscription figures for REC Tranche II:

Category I – Rs. 45 crore as against Rs. 105.94 crore reserved
Category II – Rs. 71.91 crore as against Rs. 264.84 crore reserved
Category III – Rs. 103.45 crore as against Rs. 264.84 crore reserved
Category IV – Rs. 339.43 crore as against Rs. 423.76 crore reserved
Total Subscription – Rs. 559.80 crore as against total issue size of Rs. 1,059.38 crore

Day 6 (March 7) subscription figures for HUDCO Tranche III:

Category I – No subscription as against Rs. 28.58 crore reserved
Category II – Rs. 10.47 crore as against Rs. 28.58 crore reserved
Category III – Rs. 17.30 crore as against Rs. 57.76 crore reserved
Category IV – Rs. 172 crore as against Rs. 171.48 crore reserved
Total Subscription – Rs. 199.77 crore as against total issue size of Rs. 286.40 crore

Reply

Prashant March 10, 2014 at 12:44 PM

Hi Shiv,

If one had some liquid cash in hand, where do you suggest one should invest REC, IRFC or IIFCL? or distribute equally among all of the three?
Also is there any other TFB expected this year?

Reply

Shiv Kukreja March 10, 2014 at 12:56 PM

Hi Prashant,
I would personally prefer IRFC, IIFCL and REC, in that order. No new tax free bond issue is expected this financial year now.

Reply

Prashant March 10, 2014 at 1:21 PM

Thanks Shiv for your prompt reply, I highly appreciate that. As always you rock!!!

Reply

Shiv Kukreja March 11, 2014 at 5:39 PM

Thanks Prashant!

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pradeep March 11, 2014 at 11:04 AM

what is the latest figures ?

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Shiv Kukreja March 11, 2014 at 5:57 PM

Day 7 (March 10) subscription figures for IRFC Tranche II:

Category I – Rs. 95.01 crore as against Rs. 291.69 crore reserved
Category II – Rs. 150.53 crore as against Rs. 875.06 crore reserved
Category III – Rs. 184.02 crore as against Rs. 583.76 crore reserved
Category IV – Rs. 396.97 crore as against Rs. 1,166.75 crore reserved
Total Subscription – Rs. 826.52 crore as against total issue size of Rs. 2,917.26 crore

Day 7 (March 10) subscription figures for REC Tranche II:

Category I – Rs. 45 crore as against Rs. 105.94 crore reserved
Category II – Rs. 98.52 crore as against Rs. 264.84 crore reserved
Category III – Rs. 116.88 crore as against Rs. 264.84 crore reserved
Category IV – Rs. 400.57 crore as against Rs. 423.76 crore reserved
Total Subscription – Rs. 660.98 crore as against total issue size of Rs. 1,059.38 crore

Day 7 (March 10) subscription figures for HUDCO Tranche III:

Category I – No subscription as against Rs. 28.58 crore reserved
Category II – Rs. 23.13 crore as against Rs. 28.58 crore reserved
Category III – Rs. 20.60 crore as against Rs. 57.76 crore reserved
Category IV – Rs. 190.57 crore as against Rs. 171.48 crore reserved
Total Subscription – Rs. 234.30 crore as against total issue size of Rs. 286.40 crore

Reply

Shiv Kukreja March 11, 2014 at 6:10 PM

Day 8 (March 11) subscription figures for IRFC Tranche II:

Category I – Rs. 95.01 crore as against Rs. 291.69 crore reserved
Category II – Rs. 159.23 crore as against Rs. 875.06 crore reserved
Category III – Rs. 188.97 crore as against Rs. 583.76 crore reserved
Category IV – Rs. 426.47 crore as against Rs. 1,166.75 crore reserved
Total Subscription – Rs. 869.68 crore as against total issue size of Rs. 2,917.26 crore

Day 8 (March 11) subscription figures for REC Tranche II:

Category I – Rs. 45 crore as against Rs. 105.94 crore reserved
Category II – Rs. 191.22 crore as against Rs. 264.84 crore reserved
Category III – Rs. 118.21 crore as against Rs. 264.84 crore reserved
Category IV – Rs. 440.61 crore as against Rs. 423.76 crore reserved
Total Subscription – Rs. 795.04 crore as against total issue size of Rs. 1,059.38 crore

Day 8 (March 11) subscription figures for HUDCO Tranche III:

Category I – No subscription as against Rs. 28.58 crore reserved
Category II – Rs. 23.38 crore as against Rs. 28.58 crore reserved
Category III – Rs. 21.60 crore as against Rs. 57.76 crore reserved
Category IV – Rs. 199.73 crore as against Rs. 171.48 crore reserved
Total Subscription – Rs. 244.72 crore as against total issue size of Rs. 286.40 crore

Reply

RAJESH March 11, 2014 at 6:14 PM

What logic do you apply for investing in TFB when all are AAA rated?

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Shiv Kukreja March 12, 2014 at 2:56 PM

Different companies have different fundamentals and interest rates. Also, not all the companies are ‘AAA’ rated.

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ANAND March 12, 2014 at 6:08 PM

Dear Mr. Shiv,
I WAS WAITING FOR NTPC TAX FREE BOND WHICH WAS TO BE LAUNCHED IN 2ND WEEK OF MARCH 2014. CAN YOU PLEASE INFORM WHEN IT IS GOING TO OPEN? IF ITS NOT SHOWING UP I PROPOSE TO INVEST IN IRFC OR REC WHICH ARE STILL OPEN. WHICH ONE IS BETTER AND ASSURES FIRM ALLOTMENT.
MANY THANKS FOR INFORMATION.
I POSTING THE MESSAGE HERE TOO.
BEST REGARDS
BEST REGARDS

Reply

Shiv Kukreja March 12, 2014 at 7:31 PM

Dear Mr. Anand,
NTPC has already raised an additional Rs. 500 crore in tax free bonds through a private placement, so no new issue is expected from NTPC. I think IRFC is a better issue between the two and it has enough bonds to confirm you 100% allotment.

Reply

Shiv Kukreja March 12, 2014 at 7:24 PM

Day 9 (March 12) subscription figures for IRFC Tranche II:

Category I – Rs. 95.01 crore as against Rs. 291.69 crore reserved
Category II – Rs. 162.73 crore as against Rs. 875.06 crore reserved
Category III – Rs. 207.89 crore as against Rs. 583.76 crore reserved
Category IV – Rs. 460.73 crore as against Rs. 1,166.75 crore reserved
Total Subscription – Rs. 926.35 crore as against total issue size of Rs. 2,917.26 crore

Day 9 (March 12) subscription figures for REC Tranche II:

Category I – Rs. 45 crore as against Rs. 105.94 crore reserved
Category II – Rs. 203.34 crore as against Rs. 264.84 crore reserved
Category III – Rs. 129.80 crore as against Rs. 264.84 crore reserved
Category IV – Rs. 467.51 crore as against Rs. 423.76 crore reserved
Total Subscription – Rs. 845.66 crore as against total issue size of Rs. 1,059.38 crore

Day 9 (March 12) subscription figures for HUDCO Tranche III:

Category I – Rs. 0.05 crore as against Rs. 28.58 crore reserved
Category II – Rs. 26.53 crore as against Rs. 28.58 crore reserved
Category III – Rs. 23.10 crore as against Rs. 57.76 crore reserved
Category IV – Rs. 210.92 crore as against Rs. 171.48 crore reserved
Total Subscription – Rs. 260.61 crore as against total issue size of Rs. 286.40 crore

Reply

Anand March 12, 2014 at 8:38 PM

Dear Mr. Shiv,
I WAS WAITING FOR NTPC TAX FREE BOND WHICH WAS TO BE LAUNCHED IN 2ND WEEK OF MARCH 2014. CAN YOU PLEASE INFORM WHEN IT IS GOING TO OPEN? IF ITS NOT SHOWING UP I PROPOSE TO INVEST IN IRFC OR REC WHICH ARE STILL OPEN. WHICH ONE IS BETTER AND ASSURES FIRM ALLOTMENT.
MANY THANKS FOR INFORMATION
BEST REGARDS

Reply

Shiv Kukreja March 12, 2014 at 8:40 PM

Dear Mr. Anand, I have already responded to your query above.

Reply

ANAND March 12, 2014 at 8:41 PM

Dear Mr.Shiv,
many thanks for your quick response.
Best regards

Reply

Shiv Kukreja March 12, 2014 at 8:42 PM

You are welcome!

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Shiv Kukreja March 12, 2014 at 8:59 PM

HUDCO Tranche III issue is getting closed for subscription tomorrow, March 13th.

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Chauhan March 13, 2014 at 9:39 AM

Any chances IRFC will further delay issue closure given current subscription levels? I know they have already done so once…

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Shiv Kukreja March 14, 2014 at 12:12 PM

No extension decision has been taken by IRFC as yet, so it is safe to assume that it is not getting extended. Though highly unlikely, if anything of that sort gets announced today, I’ll keep you updated.

Reply

Shiv Kukreja March 13, 2014 at 7:55 PM

Day 10 (March 13) subscription figures for IRFC Tranche II:

Category I – Rs. 95.01 crore as against Rs. 291.69 crore reserved
Category II – Rs. 169.60 crore as against Rs. 875.06 crore reserved
Category III – Rs. 286.65 crore as against Rs. 583.76 crore reserved
Category IV – Rs. 504.90 crore as against Rs. 1,166.75 crore reserved
Total Subscription – Rs. 1,056.16 crore as against total issue size of Rs. 2,917.26 crore

Day 10 (March 13) subscription figures for REC Tranche II:

Category I – Rs. 45 crore as against Rs. 105.94 crore reserved
Category II – Rs. 234.70 crore as against Rs. 264.84 crore reserved
Category III – Rs. 261.61 crore as against Rs. 264.84 crore reserved
Category IV – Rs. 494.71 crore as against Rs. 423.76 crore reserved
Total Subscription – Rs. 1,036.01 crore as against total issue size of Rs. 1,059.38 crore

Day 10 (March 13) subscription figures for HUDCO Tranche III:

Category I – Rs. 0.05 crore as against Rs. 28.58 crore reserved
Category II – Rs. 27.10 crore as against Rs. 28.58 crore reserved
Category III – Rs. 26.76 crore as against Rs. 57.76 crore reserved
Category IV – Rs. 224.59 crore as against Rs. 171.48 crore reserved
Total Subscription – Rs. 278.51 crore as against total issue size of Rs. 286.40 crore

HUDCO issue stands closed today. All the remaining four issues are also getting closed tomorrow. So, it is the last chance for the investors to invest in the tax free bonds this financial year.

Reply

Ramadas March 13, 2014 at 9:49 PM

Looks like IIFCL has extended closure date to 18th March. ICICI Direct has changed the same in IPO section. Going by subscription , IRFC may also have to extend.

Regards
Ramadas

Reply

Shiv Kukreja March 13, 2014 at 10:51 PM

Thanks Ramadas for the info, I am yet to get any intimation regarding this.

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Shiv Kukreja March 14, 2014 at 12:18 PM

It is confirmed that the closing date of IIFCL tax free bonds issue has been extended to March 18th i.e. only for one working day. Thanks Ramadas !!

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pradeep March 14, 2014 at 8:18 AM

has anyone applied using 2 applications. did they get allotement or was rejected?

Reply

Shiv Kukreja March 14, 2014 at 10:57 AM

You can submit 2 or more applications for your investments, they don’t get rejected. The only thing you need to focus on is that in order to get higher rate of interest, your total investment should not cross Rs. 10 lakhs on the “Record Date” or “Ex-Interest Date”.

Reply

Ashok Kalyanam March 14, 2014 at 8:36 AM

Hello Shiv,

Any information on forthcoming tax free bonds in Mar 2014. Is IRFC / REC / IIFCL the last option to invest or is NTPC / NHAI expected to come out with any in the next week or so?

From your subscription update of yesterday, seems like IRFC has enough bonds left and one could get a 100% allotment, right?

Do you suggest subscribing to IRFC bonds or picking some other AAA rated bonds from the secondary market with a similar YTM as that of IRFC. Which ones would you recommend from the secondary market? Hope the coupon is the same if one picks up from the secondary market?

Thanks in advance !!

Regards,
Ashok

Reply

Shiv Kukreja March 14, 2014 at 11:41 AM

Hello Mr. Ashok,

1. No more issues are expected to open this financial year. NTPC has already raised the additional Rs. 500 crore through private placement. NHAI has no plans to raise any additional amount.

2. With IRFC, 100% allotment is guaranteed.

3. I think it is better to subscribe to IRFC from the primary market rather than secondary market. Coupon rate remains the same if you buy current year’s TFBs from the secondary markets. “Step down” coupon is applicable for the bonds issued during FY 2012-13.

Reply

Raju March 14, 2014 at 12:42 PM

What about IRFC? That is also struggling for collection. It has extended once, will it extend it once again?

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Shiv Kukreja March 14, 2014 at 1:13 PM

No extension decision has been announced by IRFC as yet, so it is safe to assume that the issue is not getting extended.

Reply

Shiv Kukreja March 14, 2014 at 7:34 PM

Day 11 (March 14) subscription figures for IRFC Tranche II:

Category I – Rs. 505.01 crore as against Rs. 291.69 crore reserved
Category II – Rs. 220 crore as against Rs. 875.06 crore reserved
Category III – Rs. 463.11 crore as against Rs. 583.76 crore reserved
Category IV – Rs. 581.76 crore as against Rs. 1,166.75 crore reserved
Total Subscription – Rs. 1,769.88 crore as against total issue size of Rs. 2,917.26 crore

IRFC issue stands closed today. Huge subscription seen in Category I today. Retail investors will get 100% allotment.

Day 11 (March 14) subscription figures for REC Tranche II:

Category I – Rs. 45 crore as against Rs. 105.94 crore reserved
Category II – Rs. 240.01 crore as against Rs. 264.84 crore reserved
Category III – Rs. 284.26 crore as against Rs. 264.84 crore reserved
Category IV – Rs. 527.44 crore as against Rs. 423.76 crore reserved
Total Subscription – Rs. 1,096.71 crore as against total issue size of Rs. 1,059.38 crore

REC issue also stands closed today. Undersubscription of Rs. 85.77 crore in Category I & II will go to Category IV investors. So, Category IV investors, whose applications got submitted for bidding till yesterday, will get full allotment. Those who submitted their applications today for bidding will get proportionate allotment.

Reply

Paresh Patel March 14, 2014 at 8:38 PM

I have invested in Category II Rs. 16,05,000 by two applications.
As on to-day [ March 14 ]
Category – II – Rs. 220 crore as against Rs. 875.06 crore reserved

Total Subscription : Rs. 1769.88 crore as against total issue size of Rs. 2917/26 crore

So what i understood is i will get the full allotment in Category – II

Is this right ?

Reply

Shiv Kukreja March 14, 2014 at 10:27 PM

That is absolutely right.

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Ashok Kalyanam March 14, 2014 at 8:48 PM

Thanks Mr. Shiv. Very clear and precise response. I really appreciate !!
Regards,

Reply

Shiv Kukreja March 14, 2014 at 10:27 PM

You are most welcome !!

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Amol March 25, 2014 at 12:38 PM

Does anyone got allotment for REC bonds? The money was deducted yesterday from my account. Waiting for allotment now . Please let me know if anyone has updates

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Shiv Kukreja March 25, 2014 at 1:30 PM

REC allotment hasn’t started as yet. I think it should start happening from today evening.

Reply

Gaurav March 25, 2014 at 1:44 PM

Hi Shiv,

Are there any more Tax free bond issues in the near horizon.

Thanks

Reply

Shiv Kukreja March 25, 2014 at 1:49 PM

Hi Gaurav,
No planned issue is lined up for the current financial year. Also, even if the next government decides to allow these companies to issue such tax free bonds next financial year also, I don’t think any issue will hit the markets before October-November.

Reply

paresh patel March 26, 2014 at 8:15 AM

I got the interest amount in to my bank account to-day for REC Bond

Reply

Shiv Kukreja March 26, 2014 at 9:48 AM

Thanks for sharing this info !!

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Gaurav March 26, 2014 at 9:50 AM

Hi Shiv,

Any update when the Ennore, IRFC and IIFCL bonds will be allotted.

Thanks

Reply

Shiv Kukreja March 26, 2014 at 10:09 AM

Hi Gaurav,
I think it should take a day or two for Ennore and IRFC to start allotting their bonds. IIFCL should take 1-2 days extra.

Reply

ANAND March 26, 2014 at 5:02 PM

I have received REC Bonds in my DEMAT account. Interest is also credited to my bank account.
I presume allotment date is 25 March
IRFC allotment did not appear so far
For information please.

Reply

Shiv Kukreja March 26, 2014 at 6:17 PM

Thanks Anand for sharing this info !!

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Shiv Kukreja March 26, 2014 at 6:45 PM

REC tax-free bonds to get listed on the BSE tomorrow i.e. March 27th, Thursday.

Here are the BSE codes for the same:

8.44% 10-year bonds – BSE Code – 961873
8.88% 15-year bonds – BSE Code – 961875
8.86% 20-year bonds – BSE Code – 961877

Deemed date of allotment has been fixed as March 24, 2014. Interest will be paid on December 1st every year.

Reply

Paresh Patel March 27, 2014 at 8:45 AM

Hi Shiv
I have the following question regarding REC Tax Free Bond

BSE Code 961779. /. 8.71 %. Retail coupon rate and for others like trust it is 8.46 %
BSE code. 961776. 8.46. %
Now my question is if I purchase from market in my Trust. A/C
Code. 961779. Will be. 8.46. %. And code no. 961776. will be also. 8.46. %. for. Trust a/c.
Please give me clarification on this.
Thanks

Reply

Shiv Kukreja March 27, 2014 at 11:04 AM

Hi Paresh,

If you are able to buy 8.71% bonds having BSE Code 961779, then you’ll get 8.46% rate of interest. With 8.46% bonds BSE Code 961776, it is obvious that you’ll get 8.46% annually. So, whichever series you buy for your trust, you’ll get 8.46% only.

Reply

ANAND March 27, 2014 at 1:36 PM

Have received allotment of IRFC TFBs in my DEMAT account. Interest is awaited
For information please

Reply

Shiv Kukreja March 27, 2014 at 9:00 PM

IRFC tax-free bonds to get listed on the NSE & BSE tomorrow i.e. March 28th, Friday.

Here are the NSE & BSE codes for the same:

8.44% 10-year bonds – BSE Code – 961883, NSE Code – ND
8.88% 15-year bonds – BSE Code – 961885, NSE Code – NE

Deemed date of allotment has been fixed as March 26, 2014. Interest will be paid on April 15th every year.

Reply

Paresh Patel March 29, 2014 at 9:30 PM

I got the IRFC Tax Free Bond interest credit in to my Bank account on 29 th March.
Deemed date of allotment is March 26,2014 and interest will be paid on April 15 th every year.
So my question is that this interest which i received is a interest against my application money which will be TAXABLE and now i will receive another interest on April 15 th which is TAX FREE .[ for the period 26/03/2014 to 15/04/2014 ]
Please explain me about this.

Reply

Shiv Kukreja March 30, 2014 at 10:50 AM

Yes Paresh, that is correct. Interest on application money is taxable and subject to TDS as well. Interest from the date of allotment till the interest payment date(s) is tax-free. Further, it will remain tax-free for the rest of its maturity.

Reply

Paresh Patel April 7, 2014 at 6:53 AM

I am investing in Tax Free Bonds in my Trust A/c. which fall in to Cat. II
Now no new issue is coming now , and I would like invest in this bonds.
I would like to buy the bonds from the secondary market. My broker is charging me 0.50 % commission.
My request you to give me some name of the bonds ( both from NSE. And. BSE ) on which I will earn the interest above 8.40 %. after paying commission to the broker.

Reply

Shiv Kukreja April 7, 2014 at 10:38 AM

Sorry Paresh, we won’t be able to provide info regarding the same.

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Africa balsara July 29, 2014 at 4:27 PM

Mr. Paresh Patel,

I would like to buy tax free bonds from the market, if u bought it from the market pl. let me know how u buy. Some says u are not benefited from the buying it from MKT.,because u get it very low int.rates.
Thanking u.

Reply

Ramadas July 2, 2014 at 1:19 PM

Hi Shiv

I had applied for IRFC tax free bonds in physical form for my mother. I have got the allotment letter 4 months back , but no bonds are despatched yet. Karvy has no clue on when bonds will be despatched. How long does it take max for bonds to be dispatched once allotment letter is issued? My allotment letter tells company will despatch bonds before the max permissible time frame as law permits. Appreciate your input

Regards
Ramadas

Reply

Shiv Kukreja July 2, 2014 at 8:23 PM

Hi Ramadas,
This is something which is best answered by Karvy only. I must say the systems in place for delivering these bond certificates are quite pathetic and they take more than usual time to deliver these certificates as I think there is no time limit as such.

Reply

gp raja November 26, 2014 at 1:05 PM

What is the record date, and the date of interest payment, of HUDCO Tranche III tax free bonds issued in March 2014?
Should the bonds be purchased about a week or so before the record date, from the secondary market, for the interest to accrue to the purchaser?
Thanks.

Reply

Romi April 13, 2015 at 9:15 PM

IRFC TAX FREE BONDS ALLOTED ON 26MARCH2014.- THE BONDS WERE AAA+ RATED. YET INTEREST HAS NOT BEEN RECEIVED IN TIME.

Reply

Shiv Kukreja April 13, 2015 at 11:45 PM
Romi April 14, 2015 at 5:04 PM

THANKS A LOT FOR THE PROMPT REPLY.

Reply

Shiv Kukreja April 14, 2015 at 6:53 PM

You are welcome!

Reply

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