News Detail

• National Highways Authority of India's (NHAI) first sale of retail bonds has received bids for nearly five times the base amount so far, capitalising on investors' appetite for safe havens as the global debt crisis keeps domestic equity markets lacklustre.The state-owned agency for highways, which launched its issue on Wednesday, has received bids for about 250 billion Indian rupees ($4.68 billion), a person involved with the issue said.The issue is set to close on Jan 11, but bankers have the option of early closure.The issue has rougly received three times subscription for its qualified institutional investor category and about twice the size for the high net worth individual category, bankers said.
• The issue, which has a core size of 50 billion rupees, has an option to retain an equivalent amount as greenshoe.Bankers said that high yields being offered, on a tax adjusted basis, and the option of getting subscription on a first come basis for large investors has contributed to the success of the sale."This is a AAA rated, tax free government backed paper giving a pre-tax return of 11.7 percent for those taxed in the 30 percent bracket. It can't get better than this," said Rajesh Iyer, Executive Vice President, Products & Research at Kotak Wealth Management.
• Sale proceeds will help NHAI acquire land for the building of new roads and pay contractors for construction.The 10-year NHAI bond will give 8.2 percent interest, while the 15-year bond will give 8.3 percent.The extent of the demand can be gauged by the fact that apart from banks and financial institutions, corporates have also participated with a large company said to have invested in excess of 10 billion rupees, another source said."Given the backdrop of the current volatility in the equity markets coupled with a rate cut expectation in next 3-6 months with the interest rate at its peak, people have started looking for duration to start investing in," Iyer said.
• RBI, which has lifted rates 13 times since March 2010, has indicated that it will ease monetary policy as risks to economic growth increase.This sale comes at a time when the infrastructure sector is facing anemic funding on lack of enthusiasm on the part of banks to lend because of the fear that the borrowers may default.India wants infrastructure investment of $1 trillion over five years starting in April 2012 as it aims to boost economic growth to 10 percent and raise living standards.India's infrastructure ranks 89th out of 133 nations, according to a World Economic Forum report.
• Another state-run power sector lender Power Finance Corp (PFC) plans to raise at least 10 billion rupees via tax-free bonds with an option to retain oversubscription of upto 40.33 billion rupees."We are advising investors to hold on to their cash now as Power Finance issue is coming next and is equally attractive," a dealer with a wealth management firm said.The issue will open on Friday and close on Jan. 16, the sources said.India has allowed four firms to raise 300 billion rupees via tax-free bonds in the current financial year that began in April.National Highways Authority of India (NHAI) and Indian Railway Finance Corp (IRFC) can each raise 100 billion rupees, while Housing and Urban Development Corp. (HUDCO) and Power Finance Corp can each raise 50 billion rupees. ($1 = 53.4 Indian rupees) (Reporting by Abhishek Vishnoi and Archana Narayanan; Editing by Subhadip Sircar)

Source