Housing and Urban Development Corporation Limited, HUDCO Tax Free Bonds
- Issue period: 27 January 2012 to 6 February 2012
- Issue of Tax Free Secured Redeemable Non Convertible Bonds
- Basis of allotment : On 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 aggregating Rs 2,000 Crores with an option to retain an oversubscription upto to the shelf limit upto Rs 4,684 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 AA+ rated product
Tax free bond with yield of 8.10% – 8.35% 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 AA+ (stable) rating from the rating agencies – Fitch and CARE. The bonds would also be listed and tradable on NSE/BSE.
Housing and Urban Development Corporation Limited, HUDCO Tax Free Bonds –Company Overview:
- HUDCO is a techno-financial institution engaged in financing and promotion of housing and urban infrastructure projects throughout India with 41-years of experience in the housing financing market.
- Customers across 33 states and union territories covering around 1,800 cities and towns.
- Network of 20 regional offices and 10 development offices with zonal office in Guwahati.
- HUDCO has As on Dec 31, 2011, the Company had provided finance for over 1.50 Crore dwelling units and over 1,600 urban infrastructure projects in India.
Housing and Urban Development Corporation Limited, HUDCO Tax Free Bonds–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 1,000 thereafter) | Rs 10,000 (in multiples of Rs 1,000 thereafter) |
| Interest Rate % p.a. (Category I & II) * | 8.10 | 8.20 |
| Interest Rate % p.a. (Category III) * | 8.22 | 8.35 |
| Frequency of Interest payment | Annual | Annual |
| Issuance | demat form or physical form | demat form or physical form |
| Redemption Amount | Repayment of the Face Value and any interest that may have accrued on the Redemption Date | |
Housing and Urban Development Corporation Limited, HUDCO Tax Free Bonds–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. | ||
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