Tax-free bond issues are witnessing record subscription. In the latest development, National Highways Authority of India (NHAI)’s Rs 10,000-crore issue was subscribed 2.4 times. Investors had similarly lapped up earlier ones by NTPC, IRFC and Power Finance Corporation.
Investment advisors and financial planners say investors are choosing these issues over bank fixed deposits (FD) for the attractive after-tax returns that Tax-free bonds offer. “We are in a downward interest rate cycle. The returns on fixed deposit can go down further, and so investors are looking at these issues to lock in their investments at the current rates,” says Suresh Sadagopan, founder, Ladder 7 Financial Advisors.
It’s not only the higher post-tax returns that are attracting investors to these bonds. These bonds are issued by the government-backed companies that guarantees safety of capital, says Malhar Majumder, partner and consultant at Positive Vibes Consulting and Advisory. Read More.
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