Indian Railways Finance Corporation (IRFC) extended the closing date of its tax-free bond issue to 7th February. The struggle to raise subscriptions for AAA rated bonds of IRFC could be due to its big issue size of Rs8,663 crore, lower coupon rates than those offered by recent offers as well as the fact that IRFC had already raised money in the previous financial year. Investors rushed to small-size tax-free bond issues of NTPC, NHPC, NHB and NHAI; these were oversubscribed within a few days. It also means that investors are not swayed by just the ratings; there is a need for diversification. IRFC did not have the 20-year investment option which was available for the tax-free bonds of NTPC, NHPC and NHB.
NHAI offered retail investors 8.52% and 8.75% for bond with maturity of 10 and 15 years, while IRFC is offering 8.48% and 8.65% for bonds with tenure 10 and 15 years, respectively. Indian Renewable Energy Development Agency (IREDA) is planning to raise Rs1,000 crore through the issue of tax-free bonds for financing its renewable energy and energy-efficiency projects and to augment the company’s resource base. The bonds are rated AAA by CARE and Brickworks.