Rural Electrification Corporation (REC) which happens to be a Navratna and most definitely has high debt ratings has come with the newest issue of 80CCF infrastructure bonds.
This issue opened on 19th December 2011 and shall close on February 10 2012, and also has rates of interest which you’ll find are just about slightly under what competing two issues – IDFC and IFCI that concluded recently, though they are above the PFC issue.
Listed here are the 4 options that you may select from the REC issue.
| Option 1 | Option 2 | Option 3 | ||
|---|---|---|---|---|
| Face Value | Rs. 5,000 | Rs. 5,000 | Rs. 5,000 | Rs. 5,000 |
| Maturity | 10 years | 10 years | 15 years | 15 years |
| Buyback option | 5 years | 5 years | 7 years | 7 years |
| Interest Rate | 8.95% | 8.95% | 9.15% | 9.15% |
| Interest Payment | Compounding | Annual | Compounding | Annual |
You will come across queries on which is the top infra bond among the many ones that have been open right away, and that i think all are almost the same, and it’s just not possible for most people to express definitively that anyone is much more beneficial than other .
Another question is between annual and compounded options, of course if there exists tax advantage of deciding on the compounded one because capital gains taxes are at a lesser amount than tax on interest payment, and the reply to that particular query is it’s not tax efficient because even just in this option they demand tax on interest and don’t make use of the capital gains calculation.
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