Bond Street Action Issues worth more than Rs 10,000 cr are expected to hit market in 1-2 months from PSUs such as NTPC, PFC and REC
For the faint-hearted retail investors shaken by the turmoil in the equity markets, there is something to cheer about.
More than ' . 10,000 crore of taxfree bonds from state-run companies such as NTPC, Power Finance Corp. (PFC), Indian Railways Finance (IRFC), Indian Renewable Energy Development Agency (IREDA), Rural Electrification (REC) and Housing and Urban Development Corp. (Hudco) are set to hit the market in the next one or two months, three people familiar with the matter told ET.
On an average, investors can earn as much as 7.39-7.67% in earn as much as 7.39-7.67% in post-tax interest from these bonds with 10, 15 and 20-year maturities, going by the benchmark yield reported two weeks ago.The benchmark, 30-share BSE Sensex declined 1.22% to 24,893.81 on Monday, extending the loss sinceAugust 7 to 12%.
"It would be wise to raise funds via tax-free bonds now as many retail investors may not be looking at underperforming equities and want to lock in long-term debt products at attractive levels with tax efficiency," said Ajay Manglunia, head of fixed income at Edelweiss Securities. "The fad may fade away in the second half of the year with many PSU disinvestments being lined up, which will be attractive to retail."
Most of the companies seeking to raise from such bonds have appointed investment bankers.NTPC, Power Finance and Rural Electrification are looking to raise .'700 crore each. Indian Railways Finance and IREDA are likely to raise about . '4,200 crore and . '1,500 crore, respectively, and Hudco is aiming for '3,500 crore..
"We are trying to tap the retail money as soon as possible, before the market gets crowded out. We would appoint arrangers in a week's time," said a senior official from one of the companies.
Issuers have already mopped up unds via private placements as he government has mandated such sales only to the extent of 30% of the allotted size.
"Retail investors, who are now sitting on surplus funds obtained rom maturing high-yielding erm deposits or fixed maturity plans, are willing to invest the same in tax-free bonds," said Rupesh Bhansali, head of distribu ion at GEPL Capital.
Banks are cutting interest rates, leading to lower returns rom deposits, and the Reserve Bank of India is expected to reduce the benchmark rate to spur economic growth.
"Tax-free bonds are worth investing, especially when interest rates are likely to dip in the next wo years," said Suresh Sadagopan, principal planner at Ladder 7 Financial, an advisory firm."Retired people can have steady annual income flow from it while others can invest surplus funds o have additional income."
The central bank has cumula ively decreased rates by 75 bps.Yields have fallen to 7.75% from 8% about four months ago, push ng prices up. A rate cut expecta ion is also keeping the interest of nvestors alive.
For the faint-hearted retail investors shaken by the turmoil in the equity markets, there is something to cheer about.
More than ' . 10,000 crore of taxfree bonds from state-run companies such as NTPC, Power Finance Corp. (PFC), Indian Railways Finance (IRFC), Indian Renewable Energy Development Agency (IREDA), Rural Electrification (REC) and Housing and Urban Development Corp. (Hudco) are set to hit the market in the next one or two months, three people familiar with the matter told ET.
On an average, investors can earn as much as 7.39-7.67% in earn as much as 7.39-7.67% in post-tax interest from these bonds with 10, 15 and 20-year maturities, going by the benchmark yield reported two weeks ago.The benchmark, 30-share BSE Sensex declined 1.22% to 24,893.81 on Monday, extending the loss sinceAugust 7 to 12%.
"It would be wise to raise funds via tax-free bonds now as many retail investors may not be looking at underperforming equities and want to lock in long-term debt products at attractive levels with tax efficiency," said Ajay Manglunia, head of fixed income at Edelweiss Securities. "The fad may fade away in the second half of the year with many PSU disinvestments being lined up, which will be attractive to retail."
Most of the companies seeking to raise from such bonds have appointed investment bankers.NTPC, Power Finance and Rural Electrification are looking to raise .'700 crore each. Indian Railways Finance and IREDA are likely to raise about . '4,200 crore and . '1,500 crore, respectively, and Hudco is aiming for '3,500 crore..
"We are trying to tap the retail money as soon as possible, before the market gets crowded out. We would appoint arrangers in a week's time," said a senior official from one of the companies.
Issuers have already mopped up unds via private placements as he government has mandated such sales only to the extent of 30% of the allotted size.
"Retail investors, who are now sitting on surplus funds obtained rom maturing high-yielding erm deposits or fixed maturity plans, are willing to invest the same in tax-free bonds," said Rupesh Bhansali, head of distribu ion at GEPL Capital.
Banks are cutting interest rates, leading to lower returns rom deposits, and the Reserve Bank of India is expected to reduce the benchmark rate to spur economic growth.
"Tax-free bonds are worth investing, especially when interest rates are likely to dip in the next wo years," said Suresh Sadagopan, principal planner at Ladder 7 Financial, an advisory firm."Retired people can have steady annual income flow from it while others can invest surplus funds o have additional income."
The central bank has cumula ively decreased rates by 75 bps.Yields have fallen to 7.75% from 8% about four months ago, push ng prices up. A rate cut expecta ion is also keeping the interest of nvestors alive.