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NHAI tax-free bond issue is a good investment opportunity for investors expecting to earn returns better than bank fixed deposits and complete safety of their capital, given its tax-free stature and NHAI�s creditworthiness.
The issue is highly recommended, especially, for investors who fall in the 20 and 30% tax-bracket, as it would technically increase their yield much higher due to their tax-free nature. The interest rate of 8.2%-8.3% p.a., offered by this issue is higher than the rates offered by the commercial banks on their fixed deposits if we take into consideration the tax benefit on this. It will earn an investor a spread of 200-300 basis points at a zero incremental risk vis-a-vis other investment options in similar category.
Considering the tax benefit in this bond, currently no other debt product in the market is offering such high interest rate with this high safety net. Moreover, at this juncture the interest rates is soon expected to see a downward slope and this issue allows you to lock-on to these high rates for 10 or 15 years, which is quite a good return for a safe debt instrument.
Even NRIs can invest in these bonds, which makes it an attractive offer for them as well.
Besides the creditworthiness offered by NHAI, this bond issue offers high liquidity as the Bond would be listed on NSE as well as BSE, which is an added advantage.
However, it is not advisable to put all money in bonds/debt products. A diversification of portfolio is a must to reduce risk and enhance returns.
Keeping in mind, NHAI�s credit worthiness and better and assured returns than Bank FDs or other comparable product offering in the market, we recommend investors to subscribe to the NHAI Bond Issue.
Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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