IRFC tax-free bond issue subscribed 0.55 times within an hour

MUMBAI: Indian Railways Finance Corporations or IRFC's tax free bonds are clearly the flavour of the day as it has opened for subscription today morning with escalating investor exuberance.

About an hour since subscription opening investors have invested more than half of the total issue size set at Rs 4532 crore.

Till 11.15am total subscriptions were at around Rs 2,400crore, dealers said. Retail investors are particularly evincing huge interest as most of them could not subscribe their desired quantum in the earlier smaller issues past two months.

"We are in a falling interest rates. It is now prudent to bet on long term investments at a higher rate, available now, " said Deepak Punjwani, a dealer from GEPL Capital.

The bonds offer as high as 7.53% with15-year maturity to retail investors while those will yield 7.32% and 7.50% with 10 and 20 year maturities.

In tax free bonds, investors will receive interest income without any tax levy.

Investors can exit before maturity via secondary market route as those securities will be listed in the stock exchanges. With dipping interest rates, there is a potential for capital appreciation for them.

Two weeks ago, ET wrote about IRFC's tax free issuances.

So far it is the highest issue size while National Highways Authorities of India or NHAI are expected to hit the street with larger size in the range of Rs 7,000-10,000 crore worth of bond sales.