NHAI to raise Rs 3,300 crore from tax-free bonds

MUMBAI: The National Highways Authority of India will raise Rs 3,300 crore by selling tax-free bonds on Wednesday, just ahead of the Union Budget. Under the offer, a retail investor can earn as high as 7.69% by subscribing to 15-year bonds before the government stops allocating such securities next financial year. The paper with 10-year maturity offers 7.39%.

“For tax-free bonds, there is a lot of demand even as the financial year is about to end, as the yield across the globe is softening and demand for safe assets is rising,” said Deepak Panjwani, head of debt markets at GEPL Capital.

Retail investors can subscribe to 40% of the issue, while companies, high networth individuals and qualified institutions can buy 20% each. An investor has to buy a minimum of five bonds of Rs 1,000 each.

“Just ahead of the financial year-end, NHAI bonds still find attraction from retail investors, who will try tapping rates for the long term,” said Ajay Manglunia, executive vice president for fixed income at Edelweiss Financial.

In the past two months, NHAI has made both public and private issues. While the company sold Rs 10,000 crore of tax-free bonds in a public offer, it privately sold about Rs 100 crore of such securities to large investors.