Hudco Tax Saving Bonds Issue to open on January 9, 2013

Housing and Urban Development Corporation Limited (“COMPANY” or the “ISSUER”) is issuing Tax Free Bonds with a Face Value of Rs 1000 each in the nature of Secured, Redeemable, Non-Convertible Debentures having benefits under Section 10(15)(iv)(h) of the Income Tax Act, 1961, as amended (“BONDS”) to aggregate amount upto Rs 750 crore with an option to retain an oversubscription of up to Rs 5,000 crore (“Shelf Limit”).

The minimum subscription is five (5) Bonds across all of the Series of Bonds and in multiples of one (1) Bond thereafter. The Issue will open on January 9, 2013 and will close on January 22, 2013.

• Public Issue of Tax Free bonds in the nature of Secured, Redeemable, Non Convertible Debentures by the Company under Section 10(15)(iv)(h) of Income Tax Act, 1961 – Tranche - I Bonds
• Bonds to aggregate upto Rs 750 crore; with option to retain oversubscription upto shelf limit of Rs 5,000 crore
• Coupon rate of 7.34% for Series 1 Bonds and 7.51% for Series 2 Bonds on per annum basis; Additional interest at the rate of 0.50% per annum shall be available to the original Allottees under Category IV of investors i.e. retail individual investors investing upto Rs. 10 lacs shall be entitled to Coupon @ 7.84% for 10 years and 8.01% for 15 years.
• Credit rating of ‘CARE AA+’ by CARE and ‘IND AA+’ by India Ratings and Research Private Limited, to the Bonds
• The Issue will open on January 9, 2013, and will close on January 22, 2013
• The Bonds proposed to be listed on The National Stock Exchange of India Limited
• Option to hold Tranche 1 Bonds in either physical or demat form
• NRIs and FIIs are eligible to participate in the Issue

The Bonds have been assigned Credit rating of ‘CARE AA+’ by CARE and ‘IND AA+’ by India Ratings and Research Private Limited (IRRPL), indicating high degree of safety regarding timely servicing of financial obligations and carrying very low credit risk. 

The Tranche 1 – Series 1 and Tranche 1 - Series 2 Bonds will be redeemed after ten (10) years and fifteen (15) years respectively from the deemed date of allotment. The Bonds will be issued in both physical and dematerialized form. The Issue Price for both the Series is  ` 1,000 per bond.

There are 4 categories of investors who can apply in the issue – Category I, Category II, Category III and Category IV. Category I includes public financial institutions, scheduled commercial banks, multilateral and bilateral development financial institutions, State industrial development corporations, FIIs and their sub-accounts registered with SEBI, Provident funds and pension funds with minimum corpus of Rs 25 crore, Insurance companies, National Investment fund, Insurance funds set up and managed by army, navy or air force of the Union of India or set up and managed by the Department of Posts, Mutual Funds and Alternative Investment Funds. Category II will include Companies, and bodies corporate authorized to invest in Bonds. Category III will include Resident Indian individuals, Eligible NRIs on a repatriation or non – repatriation basis and Hindu Undivided Families applying for an amount aggregating to above Rs 10 lakh across all series in the Issue. Category IV will include resident Indian individuals, Eligible NRIs on a repatriation or non – repatriation basis and HUFs applying for an amount aggregating upto and including Rs 10 lakh across all series of Bonds in this Issue.

In the case of Series 1 of the Bonds, the coupon rate is 7.34% payable annually and in the case of Series 2, the coupon rate is 7.51% payable annually from, and including, the Deemed Date of Allotment up to, but excluding, their respective Maturity Dates. The annualized yield for Category I, II, and III for Series 1 is 7.34% while that for Series II is 7.51%. Additional interest at the rate of 0.50% per annum shall be available to the original Allottees under Category IV for the Tranche-I Series 1 Bonds and Tranche-I Series 2 Bonds respectively, which will result in an annualized yield of 7.84% and 8.01% respectively per annum. However, if the original Category IV allottees sell/transfer the bonds held (except in case of transfer of Bonds to legal heir in the event of death of the original Allottee), the coupon rate shall stand revised to the coupon rate applicable for Allottees falling under Category I, Category II and Category III.

The Company intends to utilize the Issue Proceeds for lending purposes, working capital requirements, augmenting the resource base of our Company and other operational requirements (including debt servicing, statutory payments, establishment and administrative purposes and other working capital requirements). Not more than 10% of the Overall Issue Size will be allocated to Investors who are FIIs (Category I) and Eligible NRIs (Categories III and IV). However, all subscription monies received from FIIs, Eligible NRIs (and other non resident Applicants across all Categories) through the Issue will be kept in a separate account opened and maintained by the Company, the proceeds of which account shall not be utilised for any lending purposes, and shall be utilized for the following purposes:

(a) Debt servicing, which includes servicing of both the principal amounts as well as interest payments of various debt facilities availed by the Company in the past and currently outstanding in its books of accounts, including loans, market borrowings (which include our non-convertible bonds/ debentures);

(b) Statutory payments;

(c) Establishment and administrative expenses; and

(d) Other working capital requirements of the Company.

The Lead Managers to the Issue are Enam Securities Private Limited (the merchant banking business of Enam Securities Private Limited has vested with Axis Capital Limited, which is in the process of completing the formalities of its SEBI registration), ICICI Securities Limited, Kotak Mahindra Capital Company Limited and SBI Capital Markets Limited. The Debenture Trustee for the Bondholders is SBICap Trustee Company Limited.

Disclaimer:

Housing and Urban Development Corporation Limited ( “Company”), is proposing, a public issue (“Issue”) of tax free bonds of face value of Rs. 1,000 each in the nature of secured, redeemable, nonconvertible debentures, having benefits under section 10(15)(iv)(h) of the Income Tax Act, 1961, as amended (“Bonds”) and has filed a Shelf Prospectus dated December 13, 2012 and a Prospectus Tranche – I dated December 13, 2012 (the Shelf Prospectus and the Prospectus Tranche - I referred to as “Prospectus”) with the Registrar of Companies, National Capital Territory of Delhi & Haryana, the National Stock Exchange of India Limited (“NSE”) which is the Designated Stock Exchange for the Issue and the Securities and Exchange Board of India (“SEBI”). The issue size under the Prospectus Tranche – I aggregates to Rs 750.00 crore with an option to retain over subscription up to the Shelf Limit (i.e. Rs. 5,000.00 crore). The Prospectus is available on the website of NSE at www.nseindia.com, SEBI at www.sebi.gov.in, the Company at www.hudco.org and the websites of the Lead Managers at www.enam.com, www.icicisecurities.com, www.investmentbank.kotak.com  and www.sbicaps.com. Investors are advised to take any decision to invest in the Bonds pursuant to their examination of the Company and on the basis of disclosures made in the Prospectus. Please see the section entitled “Risk Factors” beginning on page 9 of the Shelf Prospectus for risks in this regard.