IREDA to start selling Rs 1,716 crore tax-free bonds

State-owned Indian Renewable Energy Development Agency will start selling Rs 1,716 crore worth of taxfree bonds from Friday, which offer investors the highest interest rate so far in the financial year.

The sixth tax-free bond sales will offer about 10-15 basis points higher rates than earlier issuances in the past four months.

“Investors across the board are expected to rush to grab this offer,” said Ajay Manglunia, executive vice president at Edelweiss Securities.

“Towards the end of the financial year, people invest surplus funds in tax efficient instruments like tax-free bonds.”

IREDA bonds offer rates of 7.53%, 7.74% and 7.68% across maturities of 10-15-20 years. The core issue size is Rs 1,000 crore with an option to retain oversubscription up to Rs 1,716 crore.

The bond sale is supposed to close for subscription on January 22 unless the issuer mops up the targeted amount well before the stipulated date.

Last week, state-owned National Highway Authority of India (NHAI) mopped up Rs 10,000 crore via such bonds, for which it had received Rs 22,000 crore applications.

But it fell short of obtaining full subscription from retail investors who had sought higher rates following rise in the benchmark yield, a key to price those securities.

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