Hudco tax-free bonds sell like hot cakes

Under the Hudco tax-free bond offer, a retail investor could earn up to 7.69 per cent by subscribing to 15-year and 7.29 per cent with 10-year maturity.

Hudco has received bids of more than four-and-a-half times the total issue size of its tax-free bonds pegged at INR 1788.50 crore. It has collected subscriptions for Rs. 8,217 crore.

Under the Hudco tax-free bond offer, a retail investor could earn up to 7.69 per cent by subscribing to 15-year and 7.29 per cent with 10-year maturity.

There is unlikely to be any tax-free bond issues next year, which has sent the demand for such securities soaring, reports a business daily.

The retail portion of Hudco's tax-free bonds, which formed 40% of the issue size, was oversubscribed nearly two time. 

The qualified institutional borrowers (QIB) portion was subscribed by about nine times. The QIBs were allowed to invest up to 20% of the bond issue size.

In January, Hudco had raised INR 1,713 crore via a similar bond sale which saw 3.61 times subscription on the opening day of the issue. 

Tax is not payable on the interest earned on tax-free bonds, making them more attractive than taxable debt instruments.