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Rural Electrification Corporation's Rs 3,000 Crore-Tax Free Bond Issue May Open on March 5

  • State-run lender Rural Electrification Corporation plans raise up to Rs 3,000 crore through its maiden issue of tax free bonds in March. "We hope to open the issue on March 5. So the coupon would be based on the g-sec yield close on February 29," Hari Das Khunteta, director (finance), REC, told ET. "We would be offering higher rates to retail investors. We may offer it to retain investors at 30 basis point discount to g-sec yield, while others may get it at 50 basis points discount," Khunteta said.
  • The company proposes to issue tax free secured redeemable non-convertible bonds of Rs 1,000 face value each aggregating to Rs 1,500 crore, with an option to retain over-subscription up to Rs 3,000 crore. The bonds would have maturity of 10 and 15 years. State-run Rural Electrification Corporation finances and promotes rural electrification projects across the country. It plans to raise Rs 28,000 crore in the current fiscal to March, of which it has already raised around Rs 23,000 crore so far. The funds raised would be used by REC to finance its disbursement target of Rs 24,000-26,000 crore in 2011-12. REC's tax-free bind issue follows issues of NHAI, Hudco, PFC and IRFC that attracted significant money with great response from retail investors.

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