BackHNI portion of NHAI bonds sees huge rush
HNI portion of NHAI bonds sees huge rush
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If you wanted to invest more than ₹ 5 lakh in the first ever tax-free bonds of National Highways Authority of India (NHAI), you may already be late. There’s a good chance that the high networth individual (HNI; one of the three categories of investors that can invest in NHAI bonds) portion of this issue may have got oversubscribed on Wednesday, the opening day of the offer.
Though the issue closes on 11 January, the HNI and institutional category might close early since the allotment in these categories is on a first-come, first-served basis. However, the allotment to retail investors would be on proportionate basis and hence, the issue would remain open for them till 11 January, even if the entire portion gets oversubscribed before that date.
NHAI bonds are available in two maturities—10 years and 15 years. The first offers an annual 8.2% return, and the second 8.3%. The bonds have a face value of ₹ 1,000 each. Interest income is tax-free.
Even the retail portion has received substantial response. “By the end of Wednesday, the retail portion would get subscribed 30-40% of the total portion earmarked for them," Marwaha said.
For retail investors
Though there are few negatives, the bond issue looks attractive even for retail investors as the interest income is tax free. “If someone has enough surplus, it makes sense to invest in these bonds as interest income is not taxable whereas in other instruments it is taxable," says Surya Bhatia, certified financial planner and principal consultant, Asset Managers, a New Delhi-based financial planning firm.
“The only negative is that interest is annually payable and it does not offer a cumulative option to investors. Hence, one does not get the benefit of compounding," says Bhatia.
The annual interest payment augurs well for those investors who require regular income such as retired professionals. And, as these bonds enjoy the highest rating from three different rating agencies and the fact that NHAI is a government institution, the investments are virtually risk free.
abhishek.a@livemint.com
Also See | What’s in it (PDF)
PDF by Yogesh Kumar/Mint
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