JNPT - Tax Free Bonds
Jawaharlal Nehru Port Trust (JNPT), India’s largest container port, has entered the debt capital market on 11th March 2013, with a public issue of Tax Free Bonds of face value of Rs.1,000 each, in the nature of Secured Redeemable Non Convertible Debentures. Issue, closing on 15th March, has a size of Rs.500 crore, with an option in company’s hand to retain an oversubscription upto Rs.1,500 crore, aggregating Rs. 2,000 crore. Bonds, rated AAA by CRISIL and BRICKWORK, indicating highest degree of safety regarding timely servicing of financial obligations, are proposed to be listed on NSE and BSE.
The current bonds are being offered under a single series with features as under:-
| Particulars | Details |
| Tenor | 10 Years |
| Frequency of Interest Payment | Annual |
| Minimum Application Size | Rs.5,000 (5 bonds) |
| In Multilpes of | Rs.1,000 (1 bond) |
| Face Value (Rs/Bond) | Rs.1,000 |
| Issue Price (Rs/Bond) | Rs.1,000 |
| Coupon Rate (%) p.a. | |
| 7.32% p.a. |
| 6.82% p.a. |
| Put / call Option | None |
*Individuals and HUFs can apply for a maximum of Rs. 10 lakh
Bonds are to be issued both in physical and dematerialized form, hence a demat account is not necessary to buy these bonds. Also, the bonds do not have any lock-in period.
These bonds are comparable to 10.59% pre-tax return earned on other fixed income instruments, assuming the highest tax bracket of 30.9% for retail individuals, which is not very attractive vis-a-vis HUDCO bonds which are currently open for subscription. Moreover, the tenure is also lower at 10 years, as against 15 years for host of other offerings currently open.
Both JNPT and NHB bonds are identical in their pricing, coupon rate and tenure. On account of poor coupon rates, one can give this issue a miss!