Tax-free bonds fail to cheer up Infrastructure sector

Infrastructure companies, once the most preferred investment destination for equity and debt investors, have been so hit by the slowdown that all the roads to revival have been closed while incentives offered by government also failed to show the way.

A media report said that investors are now even shrugging off the bonds of these companies as negative returns on these bonds offset tax advantages.

Companies like Ennore Port, Dredging Corporation of India and the Jawaharlal Nehru Port Trust (JNPT) have all been bearing the brunt of slowdown that they are nowhere close to even half the targeted amount of fund raising through tax-free bonds.

Target of raising Rs 53,500 crore through tax-free bonds almost flopped as companies could raise just 40 per cent of it with just two weeks left to end of this fiscal.

Some companies raised less than 5 per cent of the issue size they planned and offered a pre-tax return of only about 9.5-10 per cent on these bonds this year in the second tranche, against 11.5-12 per cent last year.

Read more about: tax free bonds
Story first published: Thursday, March 21, 2013, 9:30 [IST]
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