IDFC Bonds Issue Close Date: March 16, 2011
IDFC Bonds Issue Size: Rs 3400 crore
IDFC Bonds Face value: Rs. 5000
IDFC Bonds Issue Application for Retailers Minimum Application: Rs. 5000
IDFC Bonds Maturity: 10 years
IDFC Bonds Lock in period: 5 years
Credit Rating: LAAA by ICRA, the highest credit quality rating assigned by ICRA, indicating a stable outlook Listing & Tranding: BSE and NSE
Investment Options:
Series-1: Carry a 8.25% coupon, payable annually
Series-2: Cumulative option, 8.25% coupon, compounded annually
Press Release:
– Resident Indian individuals and HUFs eligible for deduction of up to 20,000 in computation of taxable income for the current financial year under Section 80 CCF of the Income Tax Act, 1961
Ten year bonds, of face value 5000 each
– Tranche-3 Bonds to be issued in physical and in dematerialized form; option with investor
– Credit rating of: LAAA by ICRA, the highest credit quality rating assigned by ICRA, indicating a stable outlook AAA(Ind) by Fitch, indicating a stable outlook
– Issue opens February 28, 2011 and closes March 16, 2011
– To be issued in two series, both with buyback option but with different interest payment options
– Proposed to be listed on BSE and NSE. The bonds are tradable, post lock-in period of five years.
Mumbai, February 23, 2011: Infrastructure Development Finance Company Limited (“the Company” or “IDFC”) has announced the public issue of its third tranche of secured, redeemable, long term infrastructure bonds having tax benefits under Section 80 CCF of the Income Tax Act, 1961 (“Tranche 3 Bonds”) for an amount not exceeding
2,172 Crore (the “Issue”). The Tranche 3 Bonds will be issued on the terms set out in the prospectus filed by IDFC with the Registrar of Companies (ROC), Tamil Nadu. The issue proceeds are proposed to be used for the Company’s infrastructure lending activities. IDFC has the authority to raise up to 3,400 crore in one or more tranches during fiscal 2011. It has already raised 1,228 crore in the first two tranches of bonds issued on the terms set out in Prospectus – Tranche 1 in November, 2010 and Prospectus – Tranche 2 in February, 2011 respectively.
Relevant dates
The issue will open for subscription from Monday, February 28, 2011 and will close on Wednesday March 16, 2011, or on such earlier date or extended date, as may be decided by the Board subject to necessary approvals.
Issue Structure
The Tranche 3 Bonds, with a maturity of ten years, will be issued in two series.
Series-1: Carry a 8.25% coupon, payable annually
Series-2: Cumulative option, 8.25% coupon, compounded annually
The Tranche 3 bonds carry a coupon of 8.25%, which, is benchmarked to the yield on 10 year Government of India securities, which was 8.31% (annualised) on January 31, 2011. The Company calculated the coupon based on the maximum eligible coupon under the relevant notification.
The Tranche 3 will be issued in both dematerialised and physical (paper) forms as SEBI has allowed the investors to opt for the long term infrastructure bonds issued by the Company in physical form and therefore it is not necessary for potential investors to have demat accounts.
Listing
The Tranche 3 Bonds are proposed to be listed on the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE). The Tranche 3 Bonds are subject to statutory lock-in for a period of five years from the deemed date of allotment. No trading would be permitted in the Tranche 3 Bonds during the said lock-in period.
Ratings by two agencies
Credit rating agency ICRA has assigned ‘LAAA’ rating to the Tranche 3 Bonds. The rating indicates stable outlook and highest safety. Credit rating agency Fitch has rated the Tranche 3 Bonds as “AAA (Ind)”, indicating stable outlook.
Security
The Tranche 3 Bonds are fully secured with first floating pari passu charge over certain receivables of the Company and first fixed pari passu charge over specified immoveable properties of the Company. The security cover is 1.0 times of the outstanding Tranche 3 Bonds at any point in time.
The profile on the each series of bonds under the third tranche is as under:
Series | 1 | 2 |
Frequency of Interest payment | Annual | Cumulative |
Face Value per Tranche 3 Bond | 5,000 | 5,000 |
Buyback# Facility | Yes | Yes |
Buyback# Date | Date falling five years and one day from the Deemed Date of Allotment | Date falling five years and one day from the Deemed Date of Allotment |
Buyback# Amount | 5,000 per Tranche 3 Bond | 7,435 per Tranche 3 Bond |
Buyback#Intimation Period | The period beginning not before nine months prior to the Buyback Date and ending not later than six months prior to the Buyback Date | The period beginning not before nine months prior to the Buyback Date and ending not later than six months prior to the Buyback Date |
Maturity Date | 10 years from the Deemed Date of Allotment | 10 years from the Deemed Date of Allotment |
Interest Rate | 8.25% p.a. | N.A. |
Maturity Amount per Tranche 3 Bond | 5,000 | 11,050 |
Yield on Maturity | 0.0825 | 8.25% compounded annually |
Yield on Buyback# | 0.0825 | 8.25% compounded annually |
80CCF benefit
The Tranche 3 Bonds are classified as “long term infrastructure bonds” and are being issued in terms of section 80CCF of the Income Tax Act. In terms of the notification of Section 80CCF, an amount, not exceeding 20,000 , paid or deposited as subscription to long term infrastructure bonds during the previous year relevant to the assessment year beginning April 01, 2011 shall be deducted in computing the taxable income of a resident individual or Hindu Undivided Family (HUF). In the event that any applicant applies for the long term infrastructure bonds in excess of 20,000 in the year of investment, the aforestated tax benefit shall be available to such applicant only to the extent of 20,000 in the year of investment.
The Lead Managers to the Issue are JM Financial Consultants Private Limited , ICICI Securities Limited , Enam Securities Private Limited, Karvy Investor Services Limited and IDFC Capital Limited. IDBI Trusteeship Services Limited is the debenture trustee for the Tranche 3 Bonds.
About IDFC
IDFC is a leading knowledge-driven financial services company in India and plays a central role in advancing infrastructure development in the country. The Company provides a full range of financing solutions to its clients. Established in 1997 as a private sector enterprise by a consortium of public and private investors, the Company listed its Equity Shares in India pursuant to an initial public offering in August 2005.
