Twenty-year bonds seem to have caught the fancy of investors, going by their response to the just concluded tax-free bond offering of India Infrastructure Finance Company Ltd (IIFCL).

Of the total amount of Rs 2,892 crore mobilised through this issue, as much as Rs 1,160 crore has come through bonds with 20-year maturity profile. This would mean that about 40 per cent of the mop-up has come through the 20-year bonds.

IIFCL’s just-concluded public issue was the first occasion when a 20-year tax-free bond was allowed by the Finance Ministry. This may also be the last time when such a long tenure bond is allowed through a public issue.

The response to the 20-year bonds augurs well for growth of Indian debt markets, say some market observers.

India’s debt markets have not kept pace with the growth in equity markets over the last two decades, largely aided by the policy push by the Government.

For the IIFCL bond offering, the 10-year bonds have seen subscriptions worth Rs 970 crore, followed by Rs 762 crore for 15-year bonds.

As regards investor categories, qualified institutional buyers (QIBs) pumped in Rs 1,920 crore, retail investors bought bonds worth Rs 401 crore and domestic companies bought bonds worth Rs 334 crore. High networth investors have pumped in Rs 237 crore.

IIFCL had come out with a bond offering for Rs 1,500 crore with a green shoe option up to the shelf-limit of Rs 9,215 crore.

More than six tax-free bond issuers are competing for a share of the investors’ wallets in January-March. The Centre has approved tax-free bonds worth Rs 60,000 crore to be issued this fiscal.

> srivats.kr@thehindu.co.in

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