IRFC, HUDCO tax-free bonds to hit markets today

Tax-free bond issues of two Government-owned agencies — Indian Railway Finance Corporation (IRFC) and HUDCO — are to hit the market on Friday. The bonds have a tenor of 10 years and 15 years, and offer higher rates for retail investors. But, investor returns of HUDCO are marginally higher than IRFC. IRFC funds rolling stock acquisition of the Railways, while HUDCO provides housing finance to various agencies.

IRFC

The bonds of IRFC, the financing arm of Indian Railways, shall carry a coupon rate of 8 per cent per annum for 10 years and 8.1 per cent for 15 years. For the retail subscribers, who can invest a total of up to Rs 5 lakh, IRFC offers an additional coupon rate of 0.15 per cent (10 year bonds) and 0.2 per cent per annum for 15-year tenor.

The bonds are proposed to be listed on the NSE and BSE, said a Railways release. Face value of each bond is Rs 1,000, and bonds can be subscribed for a minimum of 10 and in multiples of five thereafter, it added. IRFC proposes to raise Rs 3,000 crore, with an option to retain oversubscription of up to Rs 6,300 crore.

The issue closes on February 10 or earlier (subject to the issue being open for a minimum period of 3 days).

HUDCO

HUDCO wants to mop up Rs 4,685 crore from this issue. For retail investors, the coupon rate is 8.22 per cent (10 year issue) and 8.35 per cent (15 year issue). Retail investors can invest up to Rs 5 lakh for availing themselves of these coupon rates. For other investors, the coupon rates are 8.1 per cent (10- year tenor) and 8.2 per cent (15-year tenor).

mamuni@thehindu.co.in