Huge demand forces NHAI to foreclose tax-free bond issue on third day itself

NEW DELHI: Huge demand from all categories of investors has forced the National Highway Authority of India (NHAI) to advance the closure of the second tranche of the Rs 3,300 crore tax-free bond issue to Friday, February 26, from the scheduled closure of March 1.

The bond issue continued to attract bids in large volumes from investors across categories. Data available on the BSE website showed the issue had received 18.40 times bids by 11 am on Friday.

As of Friday morning, the issue had received total bids for 9.20 crore bonds against the issue size of 50 lakh. Investor-wise breakup was not available with the exchanges at the time of filing of this report. The issue opened on Wednesday and will close for subscription on Friday.

NHAI's earlier debt offering, which ran between December 17 and December 31 last year, had received an overwhelming response from investors, who bid for 22 times the bonds on the block.

While the earlier bond issue paid an interest between 7.14 per cent and 7.60 per cent to various investor categories and maturities, the current issue pays between 7.04 per cent and 7.69 per cent. Bonds of NHAI with 10-year maturity will yield 7.29 per cent return, while the 15-year maturity bonds will earn retail investors 7.69 per cent, the highest rate for retail investors by an AAA issuer.

For non-retail categories, it is 7.04 per cent return for 10-year papers and 7.39 per cent for 15-year papers. This was the eighth issuance from NHAI this financial year. All the previous issues were oversubscribed on the first day itself.

Post this issue, merchant bankers expect issues from HUDCO and NABARD in March. As per a CBDT circular, seven CPSEs can raise Rs 40,000 crore through issuances of tax free bonds in the ongoing financial year. Investment bankers also attribute the success of these issues to the fact that these issues were spaced out well and there was no bundling of issues together.

National Highways Authority of India