Rural Electrification Financing to Get a Boost Rural Electrification Corporation (REC) has come out with the first tax free bond issue in the current financial year. For retail investors, the bonds carry tax free coupon of 8.26%, 8.71% and 8.62% for tenure of 10 years, 15 years and 20 years, respectively. For the highest tax bracket investor (30.9% tax rate), the pre-tax yield on the bond works out to 11.95%, 12.6% and 12.5% for 10 years, 15 years and 20 years, respectively, which is higher than 8.75-9% available on bank fixed deposits and other stable fixed income instruments of similar duration. Given that REC is a government owned company, credit risk is low. Rating agencies Crisil, Care, IRPL and Icra have assigned AAA ratings to the issue indicating the highest degree of safety regarding timely servicing of financial obligations with lowest credit risk.
Posted on: Fri, 30 Aug 2013 05:00:30 +0000
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