India's first corporate bond ETF garners Rs 12,400 cr from its maiden offer

Bharat Bond ETF, India's first corporate bond ETF, has garnered Rs 12,400 crore from its maiden offer that opened for subscription on December 12.

The funds raised would be utilised for capex of PSUs. The base size of the issue was Rs 7,000 crore.

"BHARATBond ETF received an enthusiastic response from all categories of investors. Both tenors of ETF were oversubscribed @ Rs 12,400 cr. Govt. has decided to retain full amount. Participation by about 55,000 retails investors was the highlight of this issue," DIPAM Secretary Tuhin Kanta Pandey said in a tweet on Tuesday.

The exchange-traded fund (ETF), which closed for subscription on December 20, will invest only in AAA-rated bonds of public sector companies and will have target maturity structures.

ETF with a 3-year maturity will follow the Nifty Bharat Bond Index-April 2023, while the one with a 10-year maturity will follow the Nifty Bharat Bond Index-April 2030.

The yield of Nifty Bharat Bond Index-April 2023 as on December 5, 2019 is 6.69 per cent and that of Nifty Bharat Bond Index-April 2030 is 7.58 per cent.

Investors who hold these ETFs for over 3 years will get the benefit of capital gains with indexation.

The ETF will invest in constituents of the Nifty Bharat Bond Indices, consisting of public sector companies.

Bharat Bond Fund of Funds (FOF) is also being launched for investors who do not have demat accounts.