Kini amp Co advises NHAI on Rs 10000 crore public issue of tax-free bonds

M. V. Kini & Co. advised National Highways Authority of India (NHAI) on public issue of tax free Bonds of the value of Rs.1,000 each to raise Rs.10,000 crore ($ 1.9 billion) to finance implementation of various projects..The team was led by Managing Attorney Ravi Kini and Partner Sumit Gupta along with Principal Associates Vidisha Krishan, Ashish Suman and Nilesh Chandra; Senior Associate Shailendra Somvanshi and Associates Shailender Sharma, Puneet Parihar, Harkirat Singh and Bhumika Tripathi..Ravi Kini in a statement said, “With this public issue, NHAI has launched its first ever tax-free bonds issue of Rs. 10,000 crore on December 28, 2011 which will close on January 11, 2012 with NHAI having the discretion to close the Issue early irrespective of whether or not any of the portion(s) are fully subscribed (subject to the Issue being open for a minimum of 3 days)”. Kini further added that the allotment shall be on first come first serve basis for Category I and II investors and on proportionate basis for Category III investors..According to Business Standard, NHAI received Rs. 12,000 crore against Rs. 4,000 crore reserved for qualified institutional investors, Rs. 6,000 crore against Rs. 3,000 crore reserved for high net worth individuals and Rs. 1,000 crore against Rs. 3,000 crore reserved for the retail segment..The bonds carry a coupon rate of 8.2 per cent on 10-year maturities and 8.3 per cent on 15-year maturities. The coupon rate on these bonds is not taxable, and should not be less than 50 basis points lower than the yield on government securities of the same residual maturity..NHAI has mandated SBI Capital Markets Ltd, ICICI Securities, Kotal Mahindra Bank Ltd as the lead managers for the proposed bond issue. The company plans to use the proceeds raised from the bonds issue to part fund various national highways projects under different government schemes..In the 2011-12 Union Budget, approvals were given to NHAI, Housing Urban Development Corporation (Hudco), Indian Railway Finance Corporation (IRFC) and Power Finance Corporation (PFC) to raise Rs 30,000 crore through tax-free bonds. While Hudco and PFC have already issued these bonds, IRFC is yet to tap the debt market with these instruments.