Shiv Kukreja On L&T; Infrastructure Bonds – Tax Saving Bonds U/S 80CCF

L&T; Infrastructure Bonds – Tax Saving Bonds U/S 80CCF

L&T Infrastructure Bonds issue is the fourth in the series of Infra Bond issues that have come up for subscription for Financial Year 2011-12 or Assessment Year 2012-13. Like IDFC issue, L&T bonds will carry a rate of interest of 9% and it is up to the investor whether he/she wants to take the annual interest payment option or the cumulative interest option.

Interest Rate9% payable annually9% compounded annually
Maturity Period10 years10 years
Buyback Period5 or 7 years5 or 7 years
Face ValueRs. 1000Rs. 1000
Buyback Amount – 5 yearsRs. 1000Rs. 1538.62
Buyback Amount – 7 yearsRs. 1000Rs. 1828.04
Maturity AmountRs. 1000Rs. 2367.36

Safety, Lock-in Period and Maturity Period

The issue has been given a rating of “AA+” by ICRA and “AA+” by CARE. The issue has a maturity period of 10 years and a lock-in period of 5 years but unlike IDFC bond issue, L&T has provided the buyback facility to the investors at two intervals, one after 5 years and the other after 7 years. It is up to the investors whether they want to remain invested even after the lock-in period.

Buyback Amount and Maturity Amount

Face Value of each bond is Rs. 1,000. Under the cumulative option, the buyback amount will be Rs. 1,538.62 after 5 years and Rs. 1,828.04 after 7 years. The maturity amount will be Rs. 2,367.36 after 10 years. Investment can be done in Demat as well as physical form.

Other Terms of the Issue

As with every Infra Bond issue, only Resident Individuals and HUFs can apply for these bonds. Minimum investment required in this issue will be Rs. 5,000 i.e. 5 bonds of face value Rs. 1,000 and subsequent additional investment can be done in multiples of one bond of Rs. 1,000. The bonds will list on BSE after the lock-in period.

Issue Opens: November 25, 2011

Issue Closes: December 24, 2011

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