HUDCO - Tax Free Bond Issue opens on 09-Jan-13 : Product Information

HUDCO - Tax Free Bonds Public Issue - Product Note.pdf Download this file


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%

 

 

 

 

 

 

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”.

 

 

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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