LPCurry's Blog: Tax benefits and silent Features of proposed tax Free Bond issue, HUDCO

The establishment of Housing and Urban Development Corporation Limited (HUDCO) in 1970 as a sectoral institution for comprehensively dealing with the problems of growing housing shortages and owned Government company with the objective to provide long term finance.

Recently organization has approved loan of Rs. 37,464 cr for housing and Rs. 84,906 cr for urban infrastructure on a cumulative basis up to Dec 2011.
On 11th Jan 2011 body has filed Draft Shelf Prospectus with SEBI and Issue of Tax Free Bonds is likely to be launched by Jan 2012.

Salient features of the proposed bond issue
1. The Bonds are issued in the form of tax-free, secured, redeemable, non-convertible Debentures and the interest on the Bonds will not form part of the total income.
2. In case of over-subscription; allotment shall be on first cum first serve basis up to the date falling 1 day prior to the date of oversubscription and on proportionate basis on the date of oversubscription, in the manner specified in the Tranche Prospectus.
3. CARE has assigned a rating of ‘CARE AA+’ to the Bonds. Instruments with this rating are considered to have high degree of safety regarding timely servicing of financial obligations. Such instruments carry very low credit risk. Fitch has assigned a rating of ‘Fitch AA+ (ind)’ to the Bonds.
4. The bonds are secured by way of floating first pari passu charge on the present and future receivables of the company to the extent of amount mobilized under the issue. The security cover will be atleast 100% of the outstanding Bonds at any point in time.
5. HUDCO shall pay [xx] % p.a. for Tranche 1 Bonds as interest on the Application amount retained. HUDCO shall also pay [xx]% p.a. on refund of application amount. Such interest shall be paid along with the monies liable to be refunded.
6. Bonds will be issued in Dematerialised form or physical form as specified by an Applicant in the Application Form. The bonds will be listed on NSE and BSE both and will be available in Demat form facilitating trading of these bonds.
7. Investors can pledge or hypothecate these bonds to avail loans.

Posted: 19 Jan 2012 04:20 AM PST

By Accommodation Times

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