REC to issue tax free bonds aggregating Rs 1000 crores

The Rural Electrification Corporation (REC) is coming with a tax free issue of bonds aggregating Rs 1000 crores. The issue has opened for subscription and is set to close on September 23 and is the first tax free bond issue for subscription by any company this year.

The tax-free coupon rate on the REC bonds will be between 8.01 per cent, 8.46 per cent and 8.37 per cent for 10 years, 15 years and 20 years, respectively. Retail investors will be offered the bonds at 8.26 per cent, 8.71 per cent and 8.62 per cent, for 10 years, 15 years and 20 years, respectively.

In order to ensure that retail investors receive allotment, the issue will have a 40 per cent reservation for retail investors. For high-networth individuals, companies and qualified institutional buyers the reservation is to the tune of 20 per cent each.

Interest received from these bonds are tax free.

Rural Electrification Corporation Limited, is a Navratna Central Public Sector Enterprise under Ministry of Power.

REC provides loan assistance to SEBs/State Power Utilities for investments in rural electrification schemes through its Corporate Office located at New Delhi and 17 field units (Project Offices), which are located in most of the States.

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Story first published: Wednesday, September 4, 2013, 12:41 [IST]

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