Disadvantages of Infrastructure Bonds

  

• Infrastructure Bonds do not offer any protection against high inflation since the rate of interest they offer is pre-determined.
• Against the pledging of the frastructure Bonds with a bank, one can borrow money from banks. The amount depends on the market value of the bond and the credit quality of the instrument.
• Moreover, it should be noted that although Infrastructure Bonds are considered to be safe, there is no assurance of getting the full investment back.
• Long Lock In period
• Lack of liquidity though they are listed on BSE and NSE
• Investor at low end of tax bracket may not benefit much

 

Application form for Applying for Tax Saving Long Term Infrastructure Bond  

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Power Finance Corporation to launch tax-free bonds last week of December 2011

Taking advantage of falling yields, the Power Finance Corporation (PFC) would look to raise ~4,000 crore through tax-free infrastructure bonds in the last week of December. The power sector lender is mulling the coupon it would be offered in a falling interest rate scenario.

“Bonds with tenure of 10 and 15 years would be issued to the investors,” Satnam Singh, chairman and managing director.
The government-controlled non-banking financial company (NBFC) had earlier decided to issue the bonds in mid December. However, with the Reserve Bank of India hinting at reversal of the monetary policy stance, the easing of yields has made the company delay its plan by a couple of weeks.

“We have been zeroing in on the coupon we would offer. It should be 8.3-8.4 per cent. Now that government yields are falling, we are deciding on what to offer to our investors,” he said. The yields on 10-year government bonds have fallen to 8.32 per cent to 8.5 per cent since December 14.

The interest will be offered on an annual basis. PFC had raised ~967 crore via tax-free infrastructure bonds in the first tranche. The company can raise a total of ~5,000 crore through the instrument.

The lender is advertising for setting up a $1-billion private equity fund. “We have invited bids to set up the fund. The bids would be accepted till last week of January, after which, we would select the fund manager,” he said. The firm is looking for a domestic fund manager to set up a private equity fund to finance projects by way of equity financing.

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Application form for Applying for Tax Saving Long Term Infrastructure Bond   

Current open Long Term Infra Bond Application form

Submit filled up application    Collection canter near you