Fw: IRFC Tax Free Bonds: Opening on 27 Jan 2012

 

Indian Railway Finance Corporation Ltd Issue period: 27 January 2012 to 10 February 2012. Issue of Tax Free Secured Redeemable Non Convertible Bonds Basis of allotment: On a first-come-first-serve basis within each category The income by way of interest on these Bonds is fully exempt from Income Tax and shall not form part of Total Income as per provisions under section 10 (15) (iv) (h) of IT Act, 1961. Issue size is Rs. 3,000 Crores, with option to retain oversubscription upto Rs. 6,300 Crores. 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. The bond yields which have increased close to 9% levels have corrected significantly and show easing of pressure on rates. High post tax yield for triple A rated product Tax free bond with yield of 8% - 8.30% 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 rating agencies - Crisil, ICRA and CARE. The bonds would also be listed and tradable on NSE/BSE. Company Overview: Financing arm of the Indian Railways Notified as a Public Financial Institution under Section 4A of the Companies Act, 1956 Registered as a NBFC-ND-IFC (Infrastructure Finance Company) with Reserve Bank of India 100% shareholding held by Government of India Consistently profit making Public Sector Undertaking Terms of the Issue: Particulars Issue details Face Value per Bond Rs 1,000 Tenor 10 years 15 years Minimum Application Rs 10,000 (in multiples of Rs 5,000 thereafter) Rs 10,000 (in multiples of Rs 5,000 thereafter) Interest Rate % p.a. (Category I & II) 8.00 8.10 Interest Rate % p.a. (Category III) 8.15 8.30 Frequency of Interest payment Annual Annual Issuance demat form or physical form demat form or physical form Interest on application % p.a. 8.00 Interest on refund % p.a 4.00 Issue Structure: Category I Category II Category III Upto 45% of Overall Issue Size* Upto 25% of Overall Issue Size* Upto 30% of Overall Issue Size* QIB & Corporate Individuals & HUF applying for more than Rs. 5 Lakhs Individuals & HUF applying for upto Rs. 5 Lakhs *on first come first serve basis to be determined on the basis of date of receipt of applications duly acknowledged by the Bankers to the Issue. * The coupon rates of 8.15% p.a. and 8.30% p.a. shall be payable only to the original allottees under Category III for the Tranche 1 and Series I Bonds and Tranche 1 and Series II Bonds respectively and shall not be payable to the transferees in case the Bonds are transferred or sold by the original allottees Please refer to the final prospectus for details. * For the purpose of information only, invest only after referring to the final prospectus.

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