IDFC 80CCF Infra Bonds Tranche 2 Details

by Manshu on January 9, 2012

in Investments

IDFC has come up with the second tranche of their infrastructure bonds, and I was a bit surprised to see that they are offering a lower interest rate from the other infrastructure bond issues that are open right now, and even their own earlier tranche 1 interest rates.

The issue is going to open on January 11 2012 and ends on February 25 2012. The issue is secured and rated ICRA AAA and Fitch AAA from ICRA and Fitch respectively.

Here are the other details about the issue.

Options

Series 1

Series 2

Face Value

Rs. 5000

Rs. 5000

Interest Payment

Annual

Cumulative

Tenor

10 years

10 years

Interest Rate

8.70%

8.70% compounded annually

Buyback

5 years

5 years

Maturity Amount

Rs. 5,000

Rs. 11,515

As you see, the interest rate is lower than some of the other issues that are open right now, and given the fact that most of these issues offer the same level of safety and listing benefits etc. – I don’t see a reason to opt for this one against the others that are available right now.

The only new question about infrastructure bonds that I’ve come across since the last time I wrote about them is if either IDBI or LIC is going to come out with an issue in the future.

I’ve not read anything that says they are and I don’t think banks can even issue these bonds, so I wouldn’t wait for these issues.

Another thing to keep in mind is that a few people mistook infrastructure mutual funds as 80CCF bonds and bought them last year. It’s a rare mistake but one that could occur so just something to keep in mind.

{ 14 comments… read them below or add one }

Nikhil January 9, 2012 at 10:24 pm

Hi..

Pl see the following URL , to see IDFC 80CCF Infra Bonds – Tranche – 2 – EXCEL Calculation sheet for members ..

http://i44.tinypic.com/hsvzw9.jpg

If you have any query , pl write , my e-mail Id : [email protected]

Tomorrow i am going to post L & T Infra Bonds Calculation Excel Sheet..

Regards

Nikhil Shah

Reply

Kapil Visht February 12, 2012 at 12:09 am

Would like to know as to how did you calculate the Tax Adjusted Yield in both without buyback and with buyback options.

Thanks
-Kapil Visht

Reply

Shiv Kukreja January 9, 2012 at 11:42 pm

Hi Manshu… It had to happen, the interest rate of 8.70% on both IDFC and L&T Infra Bonds is in line with G-Sec yields prevailing in December. The 10-year Benchmark G-Sec yield has fallen from 9% in November to 8.20% today. So, going by the trend, the interest rates on these bonds will come down further. Also, can you please add one more column “Buyback Amount” in the table above? Most of the investors invest in these bonds keeping 5 years lock-in period in mind. They remain more interested in the “Buyback Amount” rather than the “Maturity Amount”.

Also, during my recent visit to one of the collection centres in Gurgaon, I came across a few PFC Tax-Free Bond applications in which people had made investments of Rs. 20,000. I think people must have got confused between Tax-Free Bonds and Tax Saving Infra Bonds and servicing agents also did not care about it. Investors must not mix Infra Bonds with Tax-Free Bonds or Infrastructure Mutual Funds. All these three are different from Tax Saving point of view.

Reply

Manshu January 10, 2012 at 12:01 am

After I wrote the post I found the L&T bond details and realized what had happened. Excellent point about the PFC tax free bonds. I guess we take these things for granted because we talk about it all the time but for someone not used to it – I can see how they get confused esp. because the names sound all familiar.

Reply

Shiv Kukreja January 10, 2012 at 12:33 am

Ya I’ve noticed at many places “Tax-Free” added to Infra Bond investments (even in Business Papers like Economic Times, Business Standard etc.) and I wonder what is “Tax-free” there in these Infra Bonds. If the interest earned is taxable, then how come they are called Tax-Free??

And when a Tax-Free Bonds issue comes, people just confuse those with Infra Bonds. I informed my clients about NHAI Tax-Free Bonds through a mail and after I discussed about it over the phone, majority of them confused it with Infra Bonds.

Reply

Agrawal S K January 10, 2012 at 9:59 am

You are right Mr. kukreja. Actually now a days a very big foz.. of financial advisors without any qualification in the field or enough experience is available in market. Actually it needs a lot of time to study & skill. Finance is not as simple subject as counting currency notes, otherwise in our country for last 3-years so called world class experts are not able to predict its future and re-setting their targets every week.
I fill almost all my investment forms only for the fear of rejection.
So people like you are doing a very good job for awareness of investors.

Reply

Kapil Dev Tejwani January 10, 2012 at 12:39 pm

Hi Shiv ,
You mentioned that “The 10-year Benchmark G-Sec yield has fallen from 9% in November to 8.20% today. ”
Could you please tell from where can we get these details.
Kapil

Reply

Nikhil January 10, 2012 at 2:37 pm

Hi Kapil

pl visit following url..here you can get all details about Govt of India Securities ..

http://www.ccilindia.com/OMHome.aspx

Regards

Nikhil Shah

Reply

ANIL January 13, 2012 at 12:37 pm

how t resell the matured infastructure bonds

Reply

ANIL January 13, 2012 at 12:38 pm

is it one time investment or five years we ned to invest?

Reply

Manshu January 14, 2012 at 9:41 pm

One time investment and you get tax benefit in that year only. Next year if you want tax benefit you have to invest again.

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varun March 20, 2012 at 9:43 am

when will the allotment will happen for IDFC Bonds 2 2012 series?

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Amey April 19, 2012 at 3:05 pm

hello Sir,

My IDFC bond came when I was not at home and now I found status from post office that they return it.
Please let me know how & from where I have to collect my IDFC bonwaiting for reply.

Reply

Shiv Kukreja April 20, 2012 at 12:23 am

Hi Amey… Visit the below pasted link, select the IDFC Tranche you invested in, put your PAN no./Application no. to check the allotment status & then fill your address again where you want Karvy people to redispatch the certificate. You can also leave your Remarks here, if you desire so.

http://mis.karvycomputershare.com/ipo/

Reply

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