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IRFC Tax free Bonds 2013 Issue – Details & Review

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(Last Date for IRFC Tax free Bonds is extended to 8-Feb-2013)

Indian Railway Finance Corporation (IRFC’s) tax-free bond issue is set to hit the market between 21-29 January 2013.

IRFC is offering tax-free secured redeemable non convertible bonds to raise Rs 1000 crore, with an option to retain oversubscription upto Rs 8886.40 crore. The issue is similar to previous Bonds of HUDCO, REC, PFC & IIFCL.

However, HUDCO is offering better rates. Check my post on HUDCO issue. Last Date for HUDCO is also extended to 7-Feb-2013

 

About the Company

IRFC primarily funds buying of locomotives, coaches and wagons for the Indian Railways. It receives lease rentals from the Railways, which is accounted for in the Railway Budget. This ensures that the loans are securitised against rolling stock, allowing IRFC to raise funds at a lower cost. In fiscal 2011-12, IRFC funded the highest ever rolling stock acquisition comprising 506 locomotives, 2,757 passenger coaches and 13,208 freight wagons, valued at Rs 12,604 crore.

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Important Dates for Indian Railway Finance Corporation (IRFC) Tax free Bonds 2013

  • Issue Opens on  21-Jan-2013
  • Issue Closes on 29-Jan-2013

(Last Date for IRFC Tax free Bonds is extended to 8th Feb 2013)

Interest Rates 

The tradable tax-free secured redeemable non-convertible bonds of Rs 1,000 each in two series,

For Retail investors:

Series I – 10 years – coupon rate of 7.68 %
Series II – 15 years – coupon rate of 7.84 %

On a pre-tax basis, the yield comes to about 11% – 11.25% (for those who are in 30% tax slab)

Qualified institutional buyers (QIBs), high networth individuals (HNIs) and corporates will get 0.50% lesser than above rates.

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The differential rate for Retail Investors shall be applicable only to the original allottee

The interest earned will be exempt from tax under section 10 (15)(iv)(h) of the Income Tax Act, 1961.

Other Important Points

  • Minimum application for subscription in retail segment is of Rs 5,000
  • Maximum investment limit for retail investors is  Rs 10 lakhs
  • Investors can choose to apply in demat as well as physical form. Demat account is not mandatory
  • NRI Investment: Non-US NRIs can also invest in this issue. They can apply for these bonds both on repatriation basis as well as non-repatriation basis.
  • The allotment will be made on a “first-come-first-served” basis.
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The issue is AAA by CRISIL, ICRA & CARE . The rating denotes highest degree of safety regarding timely repayment of debt including both principal and interest.

SBI Capital, Axis Enam, AK Capital, Kotak Securities and ICICI Securities are the lead managers to the issue.

 

Download the Form

You can download the Form from IFRC Website.

 

Taxation Aspects of Tax FREE Bonds

Read my Post –  Taxation Aspects of Tax free Bonds?

Merits & Demerits of Tax free Bonds

Read –  Tax free Bonds – Should you invest in these?

Allotment Status of IRFC Tax free Bonds

Youc an check the Allotment status of your IRFC Tax free Bonds application at link below by entering application number / PAN number:

https://mis.karvycomputershare.com/ipo/

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