Friday, February 4, 2011


L&T Infrastructure Fin hits bond mkt

Co's Latest To Issue Tax-Saving Infra Bonds After IDFC, IIFCL & REC

Ruchira Roy MUMBAI (Economic Times Article)

L&T Infrastructure Finance Company is the latest to hit the market with its second public issue of taxsaving long-term infrastructure bonds, after Infrastructure Development Finance Company (IDFC) and Indian Infrastructure Finance (IIFCL). Rural Electrification Corporation, or REC, sold bonds through private placement.
The long-term bond issued by L&T is of the nature of secured redeemable non-convertible debentures, offering an interest rate of 8.20% per annum in series I and 8.30% compounded annually in series II, wherein the case of series I, the buyback amount is . 1,000 after a lock-in of five years and seven years. In case of series II, the buyback amount is . 1,490 at the end of five years and . 1,748 at the end of seven years. The issue size is about . 100 crore and extendable to . 300 crore on oversubscription.
    The infra companies are mandated to place the coupon rates below the benchmark government bond yields for the respective ten
ures. The bonds offered by IIFCL are in four different series. Series I and II are 10-year bonds offering 8.15% compounded annually whereas series III and IV are 15-year bonds offering 8.30%, which is higher than the 7.5-8% offered by earlier issuers such as IDFC, REC and IFCI.
    IIFCL bonds have received AAA rating by Crisil and Care while L&T Infrastructure bond has been rated as "AA+" by Care and LAA+ by ICRA, the rating agencies for the
bond issues. The IIFCL issue opens on Friday while the L&T bond issue opens for the public on February 7. Interestingly, the IDFC bond issue closes on February 4.
    These bonds are classified as "long-term infrastructure bonds" under Section 80CCF of the I-T Act for tax-saving investments, allowing for a deduction of . 20,000 over and above the . 1 lakh deduction available under section 80C. These bonds are touted to get good response as investors rush to make investments for saving taxes in this period.
    At this time when all the companies coming out with a long-term infra bond are competitively priced and the interest rates offered are narrowly ranged due to RBI guidelines, retail branding and distribution has become an important driver for the success of these issues. Also analysts say, these new category products have seen huge appetite from investors. "The brand and connect with investors is the key differentiator, besides distribution and geographic reach," says Dheerendra Kumar, CEO of Value Search Online.

Thanks & Regards
Aditya Kachru

1 comment:

Swati said...
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