Govt allows 7 entities to raise Rs 40,000 cr via tax-free bonds

Ceiling coupon rate fixed at 55 bps below govt bond yield for retail investors

The government has permitted seven companies to issue tax-free bonds worth Rs 40,000 crore ($6.29 billion) in the current financial year that started in April, according to a circular seen by Reuters.

The ceiling coupon rate for AAA-rated issuer of tax-free bonds has been fixed at 55 basis points below the government bond yield for retail investors and 80 basis points for other investors, the circular showed.

National Highways Authority of India, Indian Railways Finance Corporation, Housing and Urban Development Corporation, Indian Renewable Energy Development Agency, Power Finance Corporation, Rural Electrification Corporation and NTPC can issue the tax-free bonds, according to the circular.

($1 = 63.5925 rupees)