Sensex

Monday, December 26, 2011

Fw: NHAI Tax-free Bond Issue - Opening on 28 Dec 2011

 

Sharekhan
Investment Opportunity:

Interest rates are at peak level; best time to invest in fixed income tax free instruments.

Interest rate cycle has peaked out
Given the sharp slowdown in the industrial activity and softening of the food inflation, the interest rate cycle has peaked out. Reserve Bank of India has restrained from increasing the interest rates in the last policy review meet and is expected to begin reducing rates in March or April 2012.

Bond yields correct sharply
The bond yields which had increased close to 9% levels have corrected significantly to around 8.3% which shows easing of pressure on rates. The banks have also kept their demand deposit rates stable since past couple of months despite the increasing policy rates.

High post tax yield for triple A rated product
Tax free bond with yield of 8.2-8.3% is comparable with yields offered on government bonds and offer extremely attractive pre-tax yield close to 12% for a long period of time. The bond issue has got AAA (stable) rating from the three agencies -- Crisil, CARE and Fitch. The bonds would also be listed and tradable on NSE/BSE.

About NHAI:
National Highways Authority of India (Authority) is an autonomous organization of Government of India and was constituted mainly to survey, develop, maintain and manage the National Highways, to construct offices or workshops, to establish and maintain hotels, restaurants and rest rooms at or near the highways vested in or entrusted to it, to regulate and control the plying of vehicles, to develop and provide consultancy and construction services and to collect fees for services or benefits rendered in accordance with Section 16 of the NHAI Act. As per NHAI Act, 1988, certain stretches of National Highways have been entrusted to NHAI by the Government for development, maintenance and management.
Tranche Series-I Series-II
Tenor 10 Years 15 Years
Face Value Rs1,000/- per bond Rs1,000/- per bond
Issue Price At par i.e. Rs1,000/- per bond At par i.e. Rs1,000/- per bond
Coupon Rate 8.20% p.a. 8.30% p.a.
Interest Payment Annual Annual
Put & Call Option None None
Redemption Amount (Rs./ Bond) Repayment of the Face Value plus any interest that may have accrued at the Redemption Date Repayment of the Face Value plus any interest that may have accrued at the Redemption Date
Credit Rating "CRISIL AAA/Stable" by CRISIL, "CARE AAA" by CARE and "Fitch AAA(ind)" by FITCH
Mode of Holding Dematerialized as well as in physical form
Minimum Application 50 bonds (Rs50,000/-) and in multiples of 1 bonds (Rs1,000/-) thereafter
Listing Proposed on BSE/ NSE
Who can apply Category-I Category II Category III
Reservation for Categories 40% of overall issue size 30% of overall issue size 30% of overall issue size
Basis of allocation in case of over-subscription On first-come-first-serve basis On first-come-first-serve basis On prorata / proportionate basis
* For more details, please refer to the Terms and Conditions.

Sharekhan Ltd.: BSE Cash-INB011073351; F&O-INF011073351; NSE - INB/INF231073330; MAPIN - 100008375; DP: NSDL-IN-DP-NSDL-233-2003; CDSL-IN-DP-CDSL-271-2004; PMS INP000000662. Sharekhan Commodities Pvt. Ltd.: MCX-10080; NCDEX-00132; MAPIN - 100013912, for any complaints email at igc@sharekhan.com. Regd/Admin Add:- Lodha iThink Techno Campus, 10th Floor, Beta Building, Off. JVLR, Opp. Kanjurmarg Station, Kanjurmarg (East), Mumbai 400 042, Maharashtra. Please carefully read the risk disclosure document as prescribed by SEBI & FMC and Do's & Don'ts by NCDEX.
Disclaimer: Sharekhan Limited is engaged as a distributor for distribution of IPO/Bonds/NCD. Sharekhan or any of its group concerns do not in any manner recommends any product or any of its characteristics. The client is advised to take his / her own independent decisions for investing in any financial product after understanding their respective nature and risk and returns involved. The client may also approach his / her own consultants for investing in financial products or in relation to the tax related aspects. We do not solicit any action based upon this promotional material. Please note that the product does not take into account any particular investment objectives, financial decisions or needs of individual recipients. Neither Sharekhan nor any person connected with Sharekhan accepts any liability arising out of investment suggested in the material above.


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