HUDCO - Tax Free Bond Issue opens on 09-Jan-13 : Product Information
Highest coupon… last opportunity as benchmark G-sec yields already corrected
We believe the bond is a good investment option for a fixed income investor given its tax exempt status, higher coupon rate and issuance from a Mini Ratna government company. G-Sec yields which are a benchmark for determining coupon on tax free bonds have corrected by 15-20bps. New issues will be coming at lower coupon. Therefore HUDCO tax free bonds provides the last opportunity to lock in higher rates.
Term Sheet
| Issuer | Housing And Urban Development Corporation Ltd | ||
| Issuance of Bonds | The Allotment of the Bonds will be in a Dematerialised form as well as physical form | ||
| Put Call Option | None | ||
| Options | Series 1 | Series 2 | |
| Tenor | 10 Years | 15 Years | |
| Interest Frequency | Annual | Annual | |
| Coupon Rate (%) for Category I, II, III & V | 7.34% | 7.51% | |
| Additional Coupon Rate for Category IV* | 0.50% | 0.50% | |
| Aggregate Coupon Rate for Category IV* | 7.84% | 8.01% | |
| Effective Yield for Category I, II, III | 7.34% | 7.51% | |
| Effective Yield for Category IV | 7.84% | 8.01% | |
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| Cheque/DD Details | For Resident Applicants : “HUDCO Tax Free Bonds 2012 – Escrow Account - R”
FII and Eligible NRI Applicants : “HUDCO Tax Free Bonds 2012 – Escrow Account - NR”.
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Hence, for a retail investor, it is advisable to lock the current coupon rates. Since the interest income on the bond is tax exempt, the pre-tax yield works out to 11.34% and 11.60% for 10years and 15years respectively, which is higher compared to 8-9.5%, offered on bank FD or other stable bonds. Hence bond also scores over other fixed income instruments.
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