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Friday, November 30, 2012

REC Tax Free Bonds - Dec 2012



Issue period: 3 December 2012 to 10 December 2012
Issue Highlights:

  • Issue of Tax Free Secured Redeemable Non Convertible Bonds
  • Issue Size: Rs 1,000 Crore with an option to retain oversubscription upto Rs 4,500 Crore
  • Additional Coupon Rate - Category-IV Applicants - 0.50% p.a.
  • REC is one of only 16 Indian PSUs granted "Navratna" status
  • 66.80% shareholding held by Govt. of India as on 31 Sep 2012
  • When Bonds held by the original allottees of Category IV are sold / transferred, coupon rate will be revised to the coupon rate for Category I, II & III investors. Refer to details.
  • Application cannot be made by Non-resident Indians and Foreign nationals.
Key Benefits:
  • The income from interest on these Bonds is fully exempt from Income Tax and no TDS is applicable.
  • Wealth Tax is not levied on investment in bonds under section 2(ea) of the Wealth-tax Act, 1957.
  • Credit Ratings indicating highest safety: AAA by CARE and ICRA, AAA/Stable by CRISIL.
  • The Bonds shall be listed and can be traded on BSE and NSE.
  • No upper limit on investment amount.
  • No lock in period for the Bonds.
Terms of the Issue:
Particulars
Issue Details
Face Value per Bond
Rs 1,000
Tenor
10 years
15 years
Minimum Application
Rs 5,000 (in multiples of Rs 1,000 thereafter)
Coupon Rate % p.a. (Category I, II and III)
7.22
7.38
Additional Coupon Rate % p.a. (Category IV)
0.50
0.50
Total Coupon Rate % p.a. (Category IV)
7.72
7.88
Effective yield % p.a. (Category I, II and III)
7.22
7.38
Effective yield % p.a. (Category IV)
7.72
7.88
Frequency of Interest payment
(Paid on 1st December)
Annual
Annual
Issuance
Physical and Demat mode
Interest on application % p.a.
As per coupon rate applicable to investor category
Interest on refund % p.a.
5.00
Redemption Date
10 years from Deemed Date of Allotment
15 years from Deemed Date of Allotment
Redemption Amount
Repayment of the face value with interest

Issue Structure:
Investor Category
I - Institutional
II - Non Institutional
III - HNI (more than 10 lacs)
IV - Retail (upto and including 10 lacs)
Issue allocation
15%
15%
40%
40%
*Basis of allotment: on first come first serve basis