The NTPC Tax Free Bonds have received an overwhelming response as investors rush to subscribe to high yielding free tax returns.
The issue was oversubscribed by more than 10 times on the first day itself. The bonds, which offered retail investors as much as 7.62 per cent interest rate per annum give a much better post tax yield, when one compares them with bank deposits.
With the NTPC Tax Free bonds receiving a good response, other tax free bonds may tap the market. The company might also end-up closing the issue earlier than its scheduled date.
The issue has a AAA rating by all the leading credit rating agencies and is set to close on Sept 30. Investors chose to subscribe heavily to the bond issue ahead of the RBI's policy meet on Sept 29, where the country's central bank is widely tipped to cut interest rates.
Therefore, investors were seen locking money in the NTPC Tax Free Bond ahead of the RBI Policy. The bonds will be listed on BSE and NSE.