L&T; Infra Bonds And IDFC Infra Bonds – A Comparison

L&T has also come out with its offering of Infrastructure Bonds. It is the 4th Infrastructure Finance Company (IFC) to issue these bonds in the current financial year, after IFCI, PFC and IDFC. As both IDFC and L&T are private sector companies, offering the same 9% rate of interest on the invested amount and have 10 years as the only maturity period & not offering 15 years maturity period as an option, I would like to compare both the issues on the differences they have.

Point of DifferenceIDFC – Option 1IDFC – Option 2L&T – Option 1L&T – Option 2
Credit RatingFitch “AAA” / ICRA “AAA”ICRA “AA+” / CARE “AA+”
ListingNSE and BSEOnly BSE
Face ValueRs. 5000Rs. 5000Rs. 1000Rs. 1000
Minimum InvestmentRs. 10000Rs. 10000Rs. 5000Rs. 5000
Additional InvestmentRs. 5000Rs. 5000Rs. 1000Rs. 1000
Maturity AmountRs. 5000Rs. 11840Rs. 1000Rs. 2367.36
Buyback OptionOnly after 5 yearsAfter 5 years & 7 years
Buyback Amount – 5 yearsRs. 5000Rs. 7695Rs. 1000Rs. 1538.62
Buyback Amount – 7 yearsN.A.N.A.Rs. 1000Rs. 1828.04

Face Value, Maturity Amount, Buyback Amount & Minimum Investment

Most of the differences in the table above are due to the difference in the face value of each of the bond issue. Face Value of each IDFC bond is Rs. 5,000 and each L&T bond is Rs. 1,000. Maturity amount would be Rs. 11,840 and Rs. 2,367.36 for IDFC and L&T respectively.

IDFC is providing buyback facility which can be exercised by the bondholders only after 5 years whereas L&T has given two buyback periods, one after 5 years and the other after 7 years. Buyback amount for IDFC will be Rs. 7,695 after 5 years and the same in case of L&T will be Rs. 1,538.62 after 5 years and Rs. 1,828.04 after 7 years.

Also with L&T bonds, after the minimum investment of Rs. 5,000, one can invest in the multiples of Rs. 1,000 as against IDFC where one has to invest a minimum of Rs. 10,000 and in the multiples of Rs. 5,000 therafter.

Credit Rating

As far as Credit Ratings are concerned, both these issues have ICRA as the common rating agency apart from Fitch for IDFC and CARE for L&T. IDFC issue has been rated “AAA” by ICRA whereas L&T issue has been rated “AA+” by the same rating agency. Fitch has given “AAA” rating to the IDFC issue and CARE has given “AA+” to the L&T issue.

Listing

IDFC bonds are going to list on both NSE and BSE and L&T bonds will list only on BSE, after the lock-in period of 5 years.

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