Investments

NHPC 8.92% Tax-Free Bonds – October 2013 Issue

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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 [email protected]

NHPC Limited (formerly National Hydroelectric Power Corporation) will launch its issue of tax-free bonds from October 18th, the coming Friday. Coupon rates of NHPC are absolutely same as they are offered by PFC in its issue which is getting open for subscription from today i.e 8.92% per annum for 20 years, 8.79% per annum for 15 years and 8.43% per annum for 10 years.

NHPC has decided to run this issue till November 11th, the same date on which the PFC issue is also slated to get closed. But, in case of oversubscription or undersubscription, the company has the authority to preclose the issue or extend the issue closing date.

Size of the Issue – The base size of the issue is Rs. 500 crore and there is a green-shoe option with the company to retain oversubscription of an additional Rs. 500 crore, thus making this issue of Rs. 1,000 crore the smallest of all the tax-free bond issues launched this financial year so far.

Rs. 1,000 crore is the total amount NHPC has been authorised to raise from tax-free bonds this financial year. I think NHPC will not be required to do any private placement to raise money from tax-free bonds as there is enough appetite for its high yielding bonds in the market.

Red Signal again for NRIs – Like IIFCL did that first, NHPC has also decided not to offer these bonds to the non-resident Indians (NRIs) and qualified foreign investors (QFIs). So, if any of the NRIs wants to invest in the tax-free bonds yielding as high as 8.92%, then he/she will have to opt for the PFC issue.

Rating of the Issue – Like PFC issue, NHPC issue is also ‘AAA’ rated. ICRA, CARE and India Ratings have assigned ‘AAA’ rating to this issue, which is their highest rating to any debt issue. Also, the bonds will be ‘Secured’ by a pari passu first charge on specific assets of the company, with an asset cover of one time of the total outstanding amount of bonds.

Listing – NHPC has become the first company to propose and obtain the necessary approval to get its tax-free bonds listed on the National Stock Exchange (NSE) as well as on the Bombay Stock Exchange (BSE) this financial year.

Investors can apply for these bonds either in demat form or in physical form, as per their choice. The company will get the bonds allotted and listed within 12 working days from the issue closing date.

No Lock-in Period – As these bonds get traded on the stock exchanges and do not provide any tax deduction u/s 80CCF or 54EC, there is no lock-in period with these bonds. The investors are allowed to sell these bonds at the prevailing market rate whenever they want to do so. There are no charges involved with premature encashment and there will not be any tax penalty payable to the tax authorities.

No TDS – As these are tax-free bonds, there is no question of TDS getting deducted, whether you take them in physical form or demat form.

Interest Payment Date & Record Date – NHPC has decided to fix April 1, 2014 as the first interest payment date. For subsequent years also, interest will be paid on April 1st every year. The record date for payment of interest or the maturity amount will be 15 days prior to the date on which such amount is payable.

Categories of Investors & Allocation Ratio – The investors again have been classified in the following four categories and each category has certain percentage of the issue reserved for the allotment:

  • Category I – Qualified Institutional Bidders (QIBs) – 15% of the issue is reserved
  • Category II – Non-Institutional Investors (NIIs) – 20% of the issue is reserved
  • Category III – High Networth Individuals (HNIs) including HUFs – 25% of the issue is reserved
  • Category IV – Resident Indian Individuals (RIIs) including HUFs – 40% of the issue is reserved

Allotment on FCFS Basis – Subject to the allocation ratio, allotment will be made on a first come first serve (FCFS) basis in each of the investor categories, based on the date of upload of each application into the electronic system of the stock exchanges.

Minimum & Maximum Investment – Investors are required to apply for a minimum of five bonds of Rs. 1,000 face value each, thus making Rs. 5,000 as the minimum investment to be made. An applicant may choose to apply for these bonds of the same series or across different series also.

Retail Investors’ investment limit stands at Rs. 10 lakhs, beyond which they will be considered as HNIs and will get a lower rate of interest.

Interest on Application Money & Refund – NHPC will pay interest to the successful allottees on their application money at the applicable coupon rates, from the date of realization of application money up to one day prior to the deemed date of allotment. Unsuccessful allottees will get interest @ 5% per annum on their refund money.

Though the issue is getting launched four days after the PFC issue, I think it is very important for the investors, who are planning to invest in PFC and NHPC both or only in NHPC, to first go for the NHPC issue as soon as possible because the issue size in itself is relatively much smaller. Retail investors will have only Rs. 400 crore to be invested in this issue as compared to Rs. 1,550.36 crore to be invested in the PFC issue.

Also, I think the spillover portion of the non-retail investors is unlikely to fall into retail investors’ kitty this time around. As compared to the PFC issue, I think there is a high probability that this issue will get a better response from the non-retail investors also, as they would like to diversify their investments across different companies and this is the first time NHPC has been issuing these tax-free bonds through a public issue.

That is why, I think this issue will get preclosed much earlier than its official closing date of November 11th. I am expecting this issue to get oversubscribed very soon and get closed in October itself.

Application Form of NHPC Tax Free Bonds

Note: As per SEBI guidelines, ‘Bidding’ is mandatory before banking the application form, else the application is liable to get rejected. For bidding of your application, any further info or to invest in NHPC tax-free bonds, you can contact me at +919811797407

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118 thoughts on “NHPC 8.92% Tax-Free Bonds – October 2013 Issue”

  1. Thanks for the timely post,
    2 questions
    1.Any drwaback/negative factor in NHPC like you mentioned in PFC?
    2.Any advantage/difference/benefit of one over the other?

    Reply

  2. Hi Shiv,

    Have been always saying this and I say it once again, one mint and you have helped in making us more knowledgeable and have always given great advise. Thanks !!

    Wanted to check few things on this issue:

    1. If I sell these bonds after a couple of years in the market and if I make a profit – will I need to pay income tax on the profit amount ?

    2. My father is a NRI – if he invests in the PFC NRI category issue and again sells these in the market – will he need to pay income tax on the profit ?

    Reply

    1. Thanks a lot Kunal for your motivating words !!

      1. Yes, if there is any long term capital gain, then you’ll have to pay LTCG tax at flat 10% of the capital gain. e.g. if you sell any of these bonds at Rs. 1,050 each after 2 years, then you’ll have to pay Rs. 5 as LTCG tax.

      2. For NRI taxation, read this text from the PFC prospectus, as I am not 100% sure about its exact treatment.

      “Under section 195 of the Income Tax Act, Income Tax shall be deducted from sum payable to non residents on the long term capital gain at the rate of 20% (plus applicable surcharge and education cess) and short term capital gain at the normal rate of tax (plus applicable surcharge and education cess) arising on sale of bonds.

      As per section 90(2) of the IT Act, the provision of the IT Act would not prevail over the provision of the tax treaty applicable to the non-resident to the extent such tax treaty provisions are more beneficial to the non resident. Thus, a non resident can opt to be governed by the beneficial provisions of an applicable tax treaty”.

      So, I think TDS will get deducted @ 20% and the exact taxation is country specific.

      Reply

  4. Sir, can we apply multiple times for an issue subject to overall limit of 10L?

    e.g. 50k on 18th and then 25k on 22nd or so..

    Reply

    1. Hi Ashish,

      Yes, you are allowed to submit multiple applications within the overall limit of Rs. 10 lakh under the retail individual investor category. But, if you are applying for it online, then you should check with your broker first about their policies regarding this.

      Reply

  5. Hi Shiv,

    Are there any more TF bonds expected in this financial year?

    Which ones are those and around which month are they expected?

    Thanks in advance…

    Regards,
    Deepak

    Reply

    1. Hi Deepak,

      These companies are allowed to raise Rs. 48,000 crore with tax-free bonds this financial year, out of which approximately Rs. 12,000-15,000 crore have been raised by them so far. They are still to raise the remaining amount of Rs. 33,000-36,000 crore. So, you can expect many such issues in the days & months to come.

      I have information of only one more company so far and that is National Housing Bank (NHB). I think it will be issuing its bonds in November. Don’t know the rate of interest.

      Reply

  6. Hi Shiv,

    Do these bonds have a call option? I mean, can the company call the bonds back by paying the investor – or will this run for full 20 years(or I can sell in market)?

    If I am purchasing these bonds later from market(less than 10 lakh) will I be treated as Retail investor and get the higher interest rate?

    Reply

    1. Hi Paul,

      There is neither a call option with the company nor a put option with the investors in this issue. You can sell these bonds in the market.

      If your investment is less than Rs. 10 lakh on the record date, you’ll be treated as the retail investor and entitled to a higher rate of interest, even if buy these bonds from the open market.

      Reply

  8. Are these bonds available to U.S. retail investors via self-manged accounts at discount brokerage firms? Also, does the underwriting allow for additional issues if the existing series is exhausted?

    Reply

    1. Hi AWB,

      Persons resident outside India and foreign nationals (including Non-Resident Indians (NRIs), Foreign Institutional Investors (FIIs) and Qualified Foreign Investors (QFIs) are not eligible to invest in this NHPC issue.

      These companies are allowed to raise certain amount from the markets. For NHPC, the amount is Rs. 1,000 crore which it plans to raise in this issue itself.

      https://www.onemint.com/2013/08/16/tax-free-bonds-notification-fy-2013-14/

      Reply

  9. Hi Shiv and thanks for your continued support. Just want to ask you with inflation rising and bond price dropping, markets are expecting few more rate increases till mid of next year. Do you think it’s still wise to invest in current TFB issues or better we should wait for upcoming issues later or early next year for higher yields ?

    Reply

    1. Hi, I think the rates have been rising in a panic and are not coming down due to rupee fall & high inflation. Some factors suggest me that inflation/rates should moderate, but how & when, it is difficult to tell. So, I don’t want to wait for rates to rise more, that is why I am putting my money in these two issues.

      Reply

  10. With repo rates set to rise, it might be wise to put 50% of yr tax free bonds allocation now and wait for reminder 50% for some more issues to come out. IRFC, NHAI are the 2 big issues which will come out. Complete list of guys authorised to raise is as below
    REC( 5000 crores)
    HUDCO( 5000 crores)
    IIFCL( 10000 crores)
    PFC( 5000 crores)
    NHPC( 1000 crores)
    NHAI( 5000 crores)
    IRFC( 10000 crores)
    National Housing Bank( 3000 crores)
    Ennore Port( 500 crores)
    NTPC( 1750 crores)
    IREDA( 1000 crores)
    AAI( 500 crores)
    Cochin Shipyard( 250 crores)
    Total( 48000 crores)

    Reply

  11. Hi Shiv,
    I have 2012 REC bond (paper document), as you know the interest rate is more than 1% less than current offerings. I would like to sell that and plan to invest that in current tax free bonds. I know it may be at loss, but thinking of 10/15 years, I think that will be big benefit. How long it will take to sell that and what is the procedure to do that? Can you let me know? Thanks

    Regards,
    Sundar.

    Reply

    1. Hi Sundar,

      If you have a demat account, get your physical bonds dematerialised. It depends on your broking house & its staff how soon they are able to get it done for you, without any rejection by the broking house itself and then the Registrar of REC.

      If the whole process gets executed superfast, then it should take a minimum of 10-15 days for your bonds to get dematerialised. Once that is done, you can sell your bonds that day itself.

      Reply

      1. I don’t have a demat account. Is it required to sell the bonds? Will it take that long? Is there a way without demat account that I can sell these bonds? Please let me know. Thanks

        Regards,
        Sundar.

        Reply

        1. Hi Sundar,

          It is not mandatory to have a demat account to sell these bonds, but it is mandatory to have a demat account to sell them on the stock exchanges where there is a liquidity for these bonds. If you are able to find out a buyer for your bonds privately, which I think is extremely difficult, then only you can sell these bonds in the physical form.

          Reply

  12. Hi Shiv,

    Below link gives info about 10 yr Govt bond yield.
    http://www.bloomberg.com/quote/GIND10YR:IND/chart

    As seen from the chart, yield was highest on 19-Aug-2013. Due to this, REC, HUDCO were able to offer good interest rates. I think these companies offer interest considering last 2 weeks yield. Is it correct?

    How come recent bond (PFC, NHPC) offers more interest when yield is actually falling?

    Thanks,
    Amit.

    Reply

    2. Hi Amit, Hi Deepak,

      Yes, you are right, it is two week. Here is the exact wordings of the CBDT notification – “The reference G-sec rate would be the average of the base yield of G-sec for equivalent maturity reported by Fixed Income Money Market and Derivative Association of India (FIMMDA) on a daily basis (working day) prevailing for two weeks ending on Friday immediately preceding the filing of the final prospectus with the Exchange or Registrar of Companies (ROC) in case of public issue”.

      As you can observe it yourself from the link pasted, the rise of 19th August in the yield was very steep and the two week average on Friday before the prospectus filing date would be lower for REC as compared to PFC and NHPC. That is the reason, why their yields are higher than REC.

      The coupon difference between REC & PFC/NHPC is more in the 15-year and 20-year bonds, as the recent Repo Rate hike has pushed yields higher for the longer duration bonds.

      Reply

  13. regarding the NCD tax free bonds, kindly clarify one doubt, is it over subscription portion is also alloted on proportionate basis. is it retail investors(below 10 lakhs) will get 40% of share on entire issue size or only original portion.

    Reply

    1. Hi Raja,

      40% reservation for the retail investors is there on the total issue size. As with NHPC, the total issue size is Rs. 1,000 crore, so Rs. 400 crore is for the ratail investors. In case of undersubscription in any of the categories below the portion reserved for it, first preference goes to the retail investors. With REC, Category I was undersubscribed, so the retail investors got full allotment, even beyond 40%.

      If all the categories get oversubscribed to the maximum extent, then only the portion reserved for each category will get allotted.

      Reply

  14. Your posts are very useful for info & analysis. There have been 4 tax-free bonds during last 2 months & still IRFC ++ are expected. Any idea when these annual interests are payable – Financial year-end?

    Reply

    1. Thanks Easwaran!

      Different companies fix different dates for making interest payments, like REC has fixed it as December 1st, NHPC has fixed it as April 1st, HUDCO, IIFCL & PFC have not declared their interest payment dates as yet and their dates would be as per the deemed date of allotment.

      Reply

  15. Sir,

    Is it possible to invest in the tax-free bonds in the name of the minor? When the minor attains majority will the bonds will be in the name of the minor and guardian jointly or will it be in the name of the minor only? (assuming the bonds are in physical form)

    Secondly are these bonds transferable? I want to invest some money for the benefit of my child who is a minor now and will attain majority in November 2014. Can I apply the amount in my name now and transfer the money in her name and my name (with option either or survivor) after she attains majority?

    Thanks
    Jayashree

    Reply

    1. Hi,

      Yes, you can make this investment in the name of a minor. Also, it will remain in the name of your daughter only when she becomes a major child. Moreover, these bonds are transferable also, but not sure if it is possible to do that in the same manner as you have mentioned in your query.

      Reply

  16. Day 1 (October 18th) subscription figures:

    Category I – Rs. 420 crore as against Rs. 150 crore reserved
    Category II – Rs. 632.63 crore as against Rs. 200 crore reserved
    Category III – Rs. 390.89 crore as against Rs. 250 crore reserved
    Category IV – Rs. 171.82 crore as against Rs. 400 crore reserved
    Total Subscription – Rs. 1,615.34 crore as against total issue size of Rs. 1,000 crore

    Bumper opening day subscription figures due to huge investments by Category I, Category II & Category III investors.

    Reply

          4. Sir,

            I am some how not comfortable with long tenure. We cannot predicate how company will perform over such a long term.

            When is NTPC issue coming up?

    2. Hi, here is a useful snippet from the NHPC prospectus: “For each Portion, all Applications uploaded into the electronic system of the Stock Exchanges in the same day would be treated at par with each other. Allotment within a day would be on proportionate basis, where Bonds applied for exceeds Bonds to be allotted for each Portion respectively. Minimum allotment of One Bonds and in multiple of One Bonds will be made in case of each valid Application.”
      This seems to imply that allotments would approximately be made for category III in the proportion of 250:391, that is, ~64% of applied for bonds. Would this be a correct deduction?

      Thanks Ramachandran

      Reply

      1. A follow-up question: if (hypothetically), there were to be a level of oversubscription in Category III such that proportional allotment leads to bonds of less than Rs 10 lacs for some individual investors, would they automatically move to the retail investor category?

        Reply

        1. This is the most intelligent query I have received so far Mr. Ramachandran! Though I am not 100% sure about it, but all logics suggest me that yes, they would automatically move to the retail investors category as the interest payment is made as per the no. of bonds held in your name on the “Record Date” based on your PAN number.

          Thanks for such a query, I really appreciate it!

          Reply

          1. Hi Shiv,

            When NHAI and PFC had come out with the first tax free issue (the ones that offered 8.2% and 8.3% respectively with no step down feature), I had applied for both in the HNI category (>5L) on Day 1 itself but did not receive full allotment and my allotment in each was less than the retail limit of 5L. However, this did not upgrade me to the Retail category of 8.3%. I was recorded as a HNI investor and receive 8.2% against 8.3%.

            I am not sure if this will be the same case now but stating this personal experience as you also mentioned you were not 100% sure.

          2. Hi Sanjay,

            With NHAI bonds, there was no difference in the rate of interest among Retail Investors, HNIs & Institutional Investors. There were categories of investors only for the allotment purposes. 8.20% was for 10 years and 8.30% was for 15 years.

            With the current offers, my reasoning still remains the same. Even further buying or subsequent selling will move an investor to different categories for the interest payment purposes.

  17. Hi Shiv
    Many thanks for your in-depth analysis and clear,informative answers to all queries here.
    I have few questions regarding this :
    1) Where can I buy this TF Bond from? Online is it,do you have a link ? Online search brought me to One Mint,but couldn’t find a direct link.
    2) I have ICICIDirect Demat account – Can I buy through them ? Can I buy in the after-market hours/weekend( Saturday evening/Sunday morning ), as me being an Orthopaedic Surgeon,won’t get time otherwise.
    3) With regards to TF Bonds, especially for CPSEs, I find it difficult to comprehend, which to go for – buy now or wait for another one with better interest rate or better rating etc.
    What is the correct approach in this regard ? What I mean is, almost all Bonds on their way,would have similar interest rates with a little +/-, so what should be the approach to find the real Gem from a Lemon ?
    Thanks a lot again

    Reply

    1. Hello Dr Datta,

      1 & 2. You can apply for it online with your ICICI Direct A/c. Just login into your A/c. & check whether ICICI Direct’s platform allows you to apply for it on the weekend. Most likely it will.

      3. Rating cannot be better than ‘AAA’, but a company can. NHPC is a good company, NTPC is a good company, IIFCL is also good and there are other good companies also. Interest rates move up or down and like stock market, nobody can forecast their exact movement.

      You’ll have to keep a track of certain things to be more familiar with all these things or probably hire an unbiased financial adviser who can advise you in all these matters.

      Reply

  18. Hello Shiv,

    Thanks for all the wonderful information!
    I am planning to invest in such tax free bonds for the first time.
    One query – the interest (every year) would be directly credited to my a/c, or thru cheque?
    Same for principal post maturity? I use ICICI Demat.

    Thanks much,
    Mithun.

    Reply

  19. Hello Shiv,

    Thanks!
    One more query pl – in case NHPC suffers bad losses in future (15/20 yrs is a long time), are the investors still guaranteed of this interest for full term and principal back?

    Regards.

    Reply

    1. Hi Mithun,

      Interest rate is fixed and not guaranteed by either NHPC or the government of India. But, at the same time, the probability of a default is very low and the govt. is expected to back NHPC in case there is any default.

      This is what International Rating Agency S&P had to say about NHPC in 2009 – “There is a high likelihood that the government of India would provide extraordinary support for the company in the event of any financial distress”.

      https://www.onemint.com/2013/10/17/comparative-analysis-pfc-8-92-vs-nhpc-8-92-which-tax-free-bonds-issue-is-better-to-invest/

      Reply

  20. Shiv,

    Is the interest received on application money in these tax free binds also tax free or is that treated as normal income and hence taxable

    Reply

  21. Thanks lot Shiv.
    I am going for 10yr bond. Just to confirm, the principal will be paid at the end of 10 yrs?

    Thanks again,
    Mithun.

    Reply

  22. Day 2 (October 21st) subscription figures:

    Category I – Rs. 420 crore as against Rs. 150 crore reserved
    Category II – Rs. 632.05 crore as against Rs. 200 crore reserved
    Category III – Rs. 399.11 crore as against Rs. 250 crore reserved
    Category IV – Rs. 370.98 crore as against Rs. 400 crore reserved
    Total Subscription – Rs. 1,822.14 crore as against total issue size of Rs. 1,000 crore

    The issue should get closed tomorrow or maximum day after tomorrow.

    Reply

  23. Looks like NHPC is oversubscribed in all categories as shown in BSE Website . Did NHPC announce closure of the issue yet?

    Reply

    1. Yes, it has got oversubscribed in all the categories. No announcement has come yet from the company about its preclosure and I don’t understand why it is so. The company should have done it yesterday itself.

      Reply

  24. Day 3 (October 22nd) subscription figures:

    Category I – Rs. 420 crore as against Rs. 150 crore reserved
    Category II – Rs. 632.24 crore as against Rs. 200 crore reserved
    Category III – Rs. 402.76 crore as against Rs. 250 crore reserved
    Category IV – Rs. 470.09 crore as against Rs. 400 crore reserved
    Total Subscription – Rs. 1,925.09 crore as against total issue size of Rs. 1,000 crore

    Reply

      1. Thanks Sreedhar for sharing this info! It had to happen with such kind of response, but still I think NHPC should have taken this decision yesterday itself. Now, it will create some kind of chaos tomorrow.

        Reply

  25. Dear Shiv,
    What is the limit for interest on application money, beyond which TDS is deducted ?
    I greatly appreciate your in-depth reply to all of my querries. You are doing a great, selfless service to a lot of people.
    Thanks

    Reply

      1. Dear Shiv and Sreedhar,
        Do you think after an increase of 0.25% in repo rate on 29/10/13, the next issue of tax-free bonds will offer higher coupan rates than PFC / NHPC ?
        Thanks

        Reply

        1. Dear TCB,

          I think a hike of 0.25% in Repo Rate is already factored in the G-Sec yields and as these coupon rates depend on G-Sec rates, I don’t think it will result in higher coupon rates for TFBs.

          But, the problem lies somewhere else. India has failed miserably to control its inflation & boost its GDP growth & industrial production. So, all these factors are putting a lot of strain on fiscal deficit & current account deficit. Market participants are worried more about these things rather than Dr. Rajan hiking Repo Rate by 0.25%. That is why Indian G-Sec bond yield is not falling sharply, despite US bond yield falling below 2.50% after touching 3% just few weeks back.

          Reply

  26. Day 4 (October 23rd) subscription figures:

    Category I – Rs. 420 crore as against Rs. 150 crore reserved
    Category II – Rs. 622.25 crore as against Rs. 200 crore reserved
    Category III – Rs. 403.46 crore as against Rs. 250 crore reserved
    Category IV – Rs. 495.07 crore as against Rs. 400 crore reserved
    Total Subscription – Rs. 1,940.78 crore as against total issue size of Rs. 1,000 crore

    NHPC issue has got closed today. I don’t think anybody who has put in his/her application today will get any allotment.

    Reply

  27. NHPC Bond issue closed on 23 rd October , so for allotment normally it take 12 working days from the close date , so i think the allotment will be after 10 th November.
    Is this right calculation ?

    Reply

  28. I have applied for 107 Bonds / Rs. 1,07,000/= on 22 nd October 2013 and submit my application on the same day 22/10/2013.
    But so far the cheque is not presented in to my Bank Account for clearing.
    So what should i understand ?
    So What i understand is that my application is not consider for allotment of Bonds.
    NHPC issue was closed on 23 rd October , and you have written on 23rd
    ” I don`t think anybody who has put in his/her application to-day[23/10/2013] will get any allotment”
    But i have submitted my application on 22 nd October 2013.
    And so far i have not received my application form and cheque back.
    What is your opinion about this ? How long i have to wait to know the status of my application.

    Reply

    1. Hi Paresh,

      It is unusual that your cheque did not get cleared when you deposited it on October 22nd. You should get it checked from your broker, the collection bank or the Registrar of NHPC why your cheque did not get cleared. Ideally one should get allotment on a proportionate basis if applied on October 22nd.

      Reply

  29. Your post is v informative. The only drawback , if any, with these bonds is the long lock-in period. How active is the secondary market for these bonds, should the investor need to encash them before maturity??

    Reply

    1. Hi Annapurna,

      I think you raised this concern earlier as well. First of all, it would be incorrect to state that these bonds have a long “lock-in period”. The fact is that these bonds don’t have any lock-in period. As these bonds are tradable, you can sell them whenever you want.

      You may call it a liquidity problem and I agree to it to some extent, but then I would not fully agree with that argument as well. If you are applying for these bonds with big issue sizes and if you are not applying for speculative gains, then there is enough liquidity for a retail investor to cash it out.

      It is quite natural that when these bonds are freely available in these kind of initial offers, then there would be very few buyers from the secondary markets. But, it is unfair to state that these bonds do not have liquidity.

      Reply

  31. I also the allotment. Any idea of its listing date? Is it expected to quote at premium because of over subscription or at a discount like Hudco bonds?

    Reply

    1. Hi Raju,

      1. I think it should get listed by Friday or maximum Monday.

      2. For these bonds to get a premium, there has to be a large number of interested buyers, paying extra money over & above its face value. Just think about it, if you are to buy these bonds on listing, would you pay a higher price for the same? If not, then you should not expect a premium for your bonds.

      I don’t think there is any extraordinary demand for these bonds at this point of time. It got huge response during the offer period as its issue size was relatively smaller at Rs. 1,000 crore. So, I don’t see its price rising to a great extent until inflation & G-Sec yield start falling consistently.

      Reply

  32. NHPC tax-free bonds to get listed on the BSE & NSE on November 7th i.e. Thursday.

    Here are the BSE & NSE codes for the same:

    8.43% 10-year bonds – BSE Code – 961790, NSE Code – N1
    8.79% 15-year bonds – BSE Code – 961791, NSE Code – N2
    8.92% 20-year bonds – BSE Code – 961792, NSE Code – N3

    Deemed date of allotment has been fixed as November 2, 2013. Interest will be paid on April 1st every year.

    Reply

  33. NHPC bonds have got listed today on the BSE & NSE. 8.92% 20-year bonds series has hit a high of Rs. 1,005.90, low of Rs. 1,004.45 and trading at Rs. 1,004.90. Total bonds traded on the NSE are 226 as of now.

    Reply

  34. Thanks. It is generating better volume (1961) in BSE now with buy / ask prices of Rs 1011 / 1018. In NSE, the volume is only 510 with buy / ask prices at Rs 1007 / 1014.

    Reply

  35. 10 year G-sec yield again close to 9, and market expecting RBI to raise repo again in December. Which are the bonds in pipeline for Nov and Dec?

    Reply

  36. Hi,

    I had applied for 100 NHPC bonds. On Friday I saw the money credited back to my account. Was there so much demand that they rejected some applications. Its strange.

    Thanks

    Reply

    1. Hi Ash,

      Yes, there was huge demand for this issue and that is why the issue got closed on the 4th day itself. You must have applied for it on the 4th day i.e. October 23rd. Investors, who applied for the issue on October 18th or October 21st, have got full allotment. Investors, who applied for the issue on October 22nd, have got partial allotment.

      Reply

      1. Hi Shiv,

        I went back and checked again. Applied on 22nd. And I did get partial allotment of 18 bonds. Balance money was returned. Not sure how they did the allocation.

        Thanks

        Reply

        1. Hi Ash,

          NHPC has allotted 37 bonds to all those investors who had applied for 100 bonds on October 22nd. Did you submit two applications of Rs. 50,000 each or single application of Rs. 1 lakh?

          Reply

  37. With the 10 year government bonds crossing 9%, will the next lot of TF bonds provide a better interest rate?

    Are any expected in November?

    Reply

    1. With IIP growth coming at a poor 2%, rupee falling to 63-64 levels and CPI inflation crossing 10% mark once again, there is no scope for any rate cut as of now. In fact, if there is no improvement by next month, RBI will again have to hike its Repo Rate in the December monetary policy.

      Macroeconomic data has been consistently poor all this month, so it seems to me now that coupon rates of upcoming tax-free bonds would be fixed at higher levels.

      As of now, no new company has filed its Draft Shelf Prospectus for its bonds. So, there is no issue lined up in November. NHB, NTPC & NHAI are expected to launch their issues in December.

      Reply

        1. Hi Amit,

          As per the notification, it is “two weeks ending on Friday immediately preceding the filing of the final prospectus” and not the “draft shelf prospectus”. As of now, IRFC has filed only draft shelf prospectus. Final prospectus gets filed just a few days prior to the issue opening date. So, I think the coupon rates should be higher with the upcoming bond issues.

          Also, IIFCL has announced that they are planning to launch their 2nd tranche of tax-free bonds in the 3rd or 4th week of this month. So, the rates should be higher in that issue as well.

          Reply

  39. I had applied for the bonds in my & my wife’s name.
    I received my bonds in my demat account long back.
    My wife doesn’t have a demat account so I had to request for the bonds in a physical form for her. I still haven’t received those.

    Do they take so long? If not, whom can I contact?

    Reply

    1. If you haven’t received the bonds, then you must have received some communication from the company in the form of Allotment Advice. If not, then you need to contact the Registrar for the same with your application number.

      Reply

  40. Has anyone received interest today? It was scheduled for 1st April, I hope we are not being made ‘April fools’ 😉

    Reply

  41. Hi Shiv,
    Thanks for all the guidance which you provide to all the investors thru` your website.
    I have not received my interest of NHPC tax free bonds. Though I have sent a mail regarding this to the concerned person of Karvy & till now I have not yet received any reply. Is there any other means by which I can make out the status of my interest amount?

    Thanks
    Mohit

    Reply

    1. Thanks Mohit,
      I think Karvy is the only source through which you can get the required info. I think you should call them at Karvy’s toll free number 1800 3454 001 and get the matter resolved.

      Reply

      1. Thanks Ikjot! Hopefully, it should be on its way for me as well…was thinking of getting in touch with Karvy..but guess should wait for a day or two now…

        Reply

        1. Yes, I too have got it credited in my dad’s account today morning. I think you should wait till Monday for it to get credited as there have been too many holidays since April beginning.

          Reply

  43. I have not yet received the interest on NHPC bonds due on 1 April 15. Can someone please advise who should I contact for this? Is it Karvy?

    Reply

  44. these NHPC people/karvy people are really hopeless last year also there was a delay of 12 days & now they have a very nice excuse of public holidays. I think all of the investors should mail to company secretary

    Reply

  46. Hi Shiv
    I recd a letter from nhpc/karvy that they are reissuing these certificates issued in 2013 and are asking to surrender old ones by 4th Feb. What happens if we do not surrender, eg someone may be at outstation. Thanks in advance.
    Regards
    SB

    Reply

  47. Hi Shiv,

    I meant that is there any major issue if someone delays in surrendering the old certificates ?

    Regards,
    SB

    Reply

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