NHAI to launch Rs 5,000 cr tax-free bonds issue on Dec 28
The issue, that will remain open till January 11, has the option to retain over-subscription up to Rs 10,000 crore.
The bonds having a face value of Rs 1,000, will have two maturity periods of 10 years and 15 years and would get listed on the BSE and the National Stock Exchange.
The 10 years bond will give 8.2 percent interest per annum, while the 15 years bond of NHAI would offer 8.3 percent interest.
"We have kept three categories for taking advantage of these tax-free bonds. Of this, 30 percent subscription has been kept for retail investors who can invest up to Rs 5 lakh," Road Transport Minister C P Joshi said, while launching the issue.
Another 30 percent subscription of the issue has been kept for the high net-worth individuals (HNIs), who can invest over and above Rs 5 lakh, while rest 40 percent has been kept for institutional investors, he added.
Expressing hope that the bonds issue would get good response, Joshi said that about 21,900 km of roads will be awarded by the NHAI in the next three financial years.
The minister further said that the peak cumulative outstanding debt of NHAI is expected to be Rs 57,000 crore in 2016-17 as per the revised financial projections for the implementation of National Highways Development Programme (NHDP).
The proposed tax free bonds of Rs 10,000 crore will be one part of the market borrowings, he said, while adding that the money raised from it will be used to partly finance various NHDP projects and other government schemes.
In this year's Budget, the government had allowed NHAI to raise Rs 10,000 crore from the tax-free bonds, an instrument never used by it earlier. Till now, it used to raise funds through issue of 54EC bonds, under which subscribers can claim exemption of capital gains tax.
Citing the provisions of Income Tax rules, the NHAI prospectus for the issue has, however, clarified that only the interest earned on the new bonds will be tax-free, not the actual investments.
The prospectus further says that the bonds issue will worsen NHAI's debt to capital ratio from 0.11 to 0.29 if it raises Rs 10,000 crore from the markets.
The debt to capital ratio reflects the financing strengths of a firm; higher the ratio, the more debt company has compared to its equity.
As on June 30, 2011, the NHAI's total debt (including secured loans) stood at Rs 6,636.21 crore, the prospectus said.