NHAI- Secured NCD’s 2018

NHAI is soon coming up with its maiden public issue of taxable bonds for the retail investors. It has already filed its draft shelf prospectus with SEBI on November 16, 2018, so the issue is expected to open in the month of December’2018.

The company is yet to announce the key details of the issue, like launch date, rate of interest, duration of the bonds etc.

Proceeds of the issue will be utilised towards part financing of different projects including Bharatmala Pariyojana as well as other operational, administrative and financial purposes, the draft papers filed with SEBI showed.

Under the Bharatmala Pariyojana, government plans to build 50 new national corridors and connect 550 district centres with national highways, focusing on optimising efficiency of freight and passenger movement across the country by bridging critical infrastructure gaps through effective interventions.

Here you have some of the salient features of the issue:

Size of the Issue – NHAI has decided to raise Rs. 10,000 crore from this issue.

Coupon Rates on Offer – The company is yet to announce the interest rates it is going to offer in this issue. However, the market speculation is that the company will offer rates between 8.50% to 9% per annum for a period of 3 years to 10 years.

I’ll update this post as the company discloses its rates.

Rating of the Issue – CRISIL, ICRA, CARE and India Ratings, all rating agencies have assigned ‘AAA’ rating to this issue. Also, these bonds are ‘Secured’ in nature i.e. in case of any default in interest payments or principal repayment at the time of maturity, the bondholders will have the right to make claim on certain assets of the company.

NRI/QFI Investment Not Allowed – Like with most such recent NCD issues, Non-Resident Indians (NRIs) will not be able to make investments in this issue. Qualified Foreign Investors (QFIs) too are not eligible to invest in this issue.

Investor Categories & Allocation Ratio – The investors have been classified in the following four categories and the company is yet to announce what percentage of the issue will be reserved for each of the categories during the allocation process:

  • Category I – Qualified Institutional Bidders (QIBs)
  • Category II – Non-Institutional Investors (NIIs)
  • Category III – High Net Worth Individuals, including HUFs, investing more than Rs. 10 lakhs
  • Category IV – Resident Indian Individuals, including HUFs, investing up to Rs. 10 lakhs

Allotment on First-Come First-Served Basis – Subject to the allocation ratio, allotment will be made on a first-come first-served basis, as well as on a date priority basis, i.e. on the date of over-subscription, the allotment will be made on a proportionate basis to all the applicants of that day on which it gets oversubscribed.

Listing & Allotment –These NCDs will get listed only on both BSE & NSE Exchanges. The listing will take place within 12 working days after the issue gets closed. Though there is no option of a premature redemption, the investors can always sell these NCDs on the stock exchanges.

Demat A/c. Mandatory – Demat account is mandatory to invest in these NCDs as the company is not providing the option to apply for these NCDs in physical or certificate form

No Lock-In Period – These bonds do not carry any lock-in period and you can buy/sell them on the stock exchanges at the market price whenever you want.

Loan Against Bonds – These bonds can be pledged or hypothecated for obtaining loans as per the terms set by the lending company.

Minimum & Maximum Investment – Investors are required to put in a minimum investment of Rs. 10,000 in this issue i.e. at least 10 bonds of face value Rs. 1,000 each. There is no upper limit for the investors to invest in this issue. 

Interest Payment Date – NHAI is yet to announce the interest payment date for these bonds.

Record Date – For the payment of interest or the maturity amount, record date will be 15 days prior to the date on which such amount is due to be payable.

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