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Friday, November 30, 2012

Fw: REC Tax Free Bonds - Issue opening on 3 Dec 2012

 

Sharekhan Mailer
RURAL ELECTRIFICATION CORPORATION LIMITED
Issue period: 3 December 2012 to 10 December 2012

Issue Highlights:

  • Issue of Tax Free Secured Redeemable Non Convertible Bonds
  • Issue Size: Rs 1,000 Crore with an option to retain oversubscription upto Rs 4,500 Crore
  • Additional Coupon Rate - Category-IV Applicants - 0.50% p.a.
  • REC is one of only 16 Indian PSUs granted "Navratna" status
  • 66.80% shareholding held by Govt. of India as on 31 Sep 2012
  • When Bonds held by the original allottees of Category IV are sold / transferred, coupon rate will be revised to the coupon rate for Category I, II & III investors. Refer to details.
  • Application cannot be made by Non-resident Indians and Foreign nationals.
Key Benefits:
  • The income from interest on these Bonds is fully exempt from Income Tax and no TDS is applicable.
  • Wealth Tax is not levied on investment in bonds under section 2(ea) of the Wealth-tax Act, 1957.
  • Credit Ratings indicating highest safety: AAA by CARE and ICRA, AAA/Stable by CRISIL.
  • The Bonds shall be listed and can be traded on BSE and NSE.
  • No upper limit on investment amount.
  • No lock in period for the Bonds.
Terms of the Issue:

ParticularsIssue Details
Face Value per Bond Rs 1,000
Tenor 10 years 15 years
Minimum Application Rs 5,000 (in multiples of Rs 1,000 thereafter)
Coupon Rate % p.a. (Category I, II and III) 7.22 7.38
Additional Coupon Rate % p.a. (Category IV) 0.50 0.50
Total Coupon Rate % p.a. (Category IV) 7.72 7.88
Effective yield % p.a. (Category I, II and III) 7.22 7.38
Effective yield % p.a. (Category IV) 7.72 7.88
Frequency of Interest payment
(Paid on 1st December)
Annual Annual
Issuance Physical and Demat mode
Interest on application % p.a. As per coupon rate applicable to investor category
Interest on refund % p.a. 5.00
Redemption Date 10 years from Deemed Date of Allotment 15 years from Deemed Date of Allotment
Redemption Amount Repayment of the face value with interest

Issue Structure:

Investor Category I - Institutional II - Non Institutional III - HNI (more than 10 lacs) IV - Retail (upto and including 10 lacs)
Issue allocation 15% 15% 40% 40%
*Basis of allotment: on first come first serve basis


* For the purpose of information only, invest only after referring to the final prospectus.
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