PFC Tax-Free bonds 2015

 

40% of the AAA rated issue is open to retail investors on first come, first served basis.

 

After the hugely successful NTPC tax free bond issue that was oversubscribed 11 times on the first day, it is now the turn of Power Finance Corporation (PFC) bonds to hit the market.

Since the interest rates of the bonds were fixed before the latest round of rate cuts by the RBI, the 20 year paper is still giving 7.6% for retail investors and for someone in the 30% tax bracket, the pre-tax yield will work out to 11%. The issue opens on October 5.

Retail investors should note that only `280 crore (or 40% of the issue) is open to them. As the issue will operate on a `first come, first served' basis, investors would do well to put in their money on 5 October itself. Going by the NTPC trend, the issue is likely to be oversubscribed. Investors who put in their money on the first day will be allotted the bonds in a proportionate manner.For instance, if the issue is oversubscribed 10 times, and you have applied for `10 lakh bonds, you will at least get `1 lakh.

PFC can raise `1,000 crore from taxfree bonds this financial year. The company has already raised `300 crore by issuing these bonds in private placement. CRISIL, ICRA and CARE have as signed `AAA' rating to the issue. In case of any default, bondholders carry the right to make claim on certain assets of the company. The bonds will get allotted and listed within 12 working days from the closing date of the issue.

Best Tax Saver Mutual Funds or ELSS Mutual Funds for 2015

1.ICICI Prudential Tax Plan

2.Reliance Tax Saver (ELSS) Fund

3.HDFC TaxSaver

4.DSP BlackRock Tax Saver Fund

5.Religare Tax Plan

6.Franklin India TaxShield

7.Canara Robeco Equity Tax Saver

8.IDFC Tax Advantage (ELSS) Fund

9.Axis Tax Saver Fund

10.BNP Paribas Long Term Equity Fund

You can invest Rs 1,50,000 and Save Tax under Section 80C by investing in Mutual Funds

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