State-run power utility NTPC’s Rs. 700-crore public issue for tax-free bonds will open on Wednesday, of which 40 per cent or Rs. 280 crore is reserved for retail investors.
The company will open the public issue of Rs. 700 crore tax-free bonds on September 23 for which the government had given approval, NTPC chairman and managing director A K Jha told.
Earlier in July, the government had approved the plan to raise Rs. 1,000 crore through tax-free bonds, including Rs. 700 crore through public issue.
NTPC was among seven state-run entities, including NHAI and IRFC, which were given permission to raise Rs. 40,000 crore in the current fiscal year through tax-free bonds.
“The 40 per cent of the issue i.e Rs. 280 crore is reserved for allocation to retail category. The remaining issue will be for non-retail investors including QIB, corporates and high net worth Indians,” NTPC director (finance) K Biswal said.
“For a person in 30 per cent tax bracket the effective pre-tax yield is 10.88 per cent approximately in 20 year option. The coupons (rates) are attractive than the returns from FD (fixed deposits) returns which hover in the range of 7.5 to 8.75 per cent per annum for various maturities,” Mr Biswal said.
The issues has three tenures – 10 years, 15 years and 20 years.
For retail investors the coupon rate is 7.36 per cent for 10 years tenure, 7.53 per cent for 15 years and 7.62 per cent for 20 years.
Similarly for non-retail investors, the coupon rate is 7.11 per cent for 10 years, 7.28 per cent for 15 years and 7.37 per cent for 20 years.
Against the allocation of Rs. 1,000 crore tax free bonds, the company has already issues Rs. 300 crore on private placement basis to institutional investors which was oversubscribed by 7.25 per times.