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News Release
January 14, 1999
Public Issue of 6th Tranche of ICICI Safety Bonds - January
1999
Under the Umbrella Prospectus approved by Securities
and Exchange Board of India (SEBI), ICICI Limited is allowed to raise
up to Rs.3,000 crore with a right to retain over subscription up to Rs.3,000
crore in tranches over a one year period.
ICICI has made five public offerings under the Umbrella
prospectus and received good response from the Household Savers.
In the sixth tranche, under the series "ICICI Safety
Bonds - January '99", ICICI is offering for public subscription, Unsecured
Redeemable Bonds in the nature of Debentures aggregating Rs. 300 crore
with a right to retain oversubscription of up to Rs 300 crore. The issue
will open for subscription on January 21, 1999 and will remain open till
February 9, 1999.
The AAA ratings for the bonds have been reaffirmed by
the three premier credit rating agencies :- AAA by CRISIL, LAAA by ICRA
and CARE AAA by CARE. The ratings signify highest safety with regard to
timely payment of principal and interest.
The Issue offers various options under five types of
bonds - Easy Instalment Bond, Encash Bond, Tax Saving Bond, Regular Income
Bond and the Money Multiplier Bond (in the nature of Deep Discount Bond).
EASY INSTALMENT BOND
A new instrument, Easy Instalment Bond has been introduced
in the January 1999 issue. The Easy Instalment Bond, as the name suggests,
provides the investor with a facility to pay for the Bond in four easy
instalments of Rs.2,500 each, over a period of one year.
Normally, an investor has to pay the full amount at the
time of investment in Bonds, and therefore, investors having smaller savings
at regular intervals are unable to invest. Through the Easy Instalment
Bond, ICICI now provides such small savers with an avenue to invest their
savings as early as possible at higher yields offered by these bonds.
The Face Value of the Bond is Rs.10,000/- payable in
four equal instalments as given in the table below. The Bond has a Redemption
period of 5 years.
Instalment Payment Schedule:
| |
On Application |
3 months from
DDA@ |
6 months from
DDA@ |
9 months from
DDA@ |
| Amount Payable (Rs.) |
2,500/- |
2,500/- |
2,500/- |
2,500/- |
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@ Deemed Date of Allotment
Interest for the first year will be paid at 8%, and at
15% for the remaining four years.
The interest rates payable annually and the yield thereon
are as follows:
| Year |
1st |
2nd to 5th |
| Applicable rate of interest for respective
year (%)p.a.* |
8.00 |
15.00 |
| Yield (%) p.a. |
8.10 |
13.80 |
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In case of Bonds for which any or all of the call monies are not paid
within the stipulated period, ICICI will repay such Bonds at the end of
one year from the Deemed date of Allotment along with interest thereon
at the rate of 8%.
ENCASH BOND
Encash Bond offers the Investor growing interest rate
with an option to withdraw his money before maturity, at any of the specified
ICICI locations.
- After one year, the Investor can access his savings round a year on
any working day in case he requires to. All original individual allottees
will have an option to redeem the Bond at its face value of Rs.5,000
after the completion of one year from the Deemed Date of Allotment till
one month prior to maturity date.
- In a day, an investor can redeem up to 50 bonds having total face
value of Rs.2.50 lakh.
- The Bonds can be redeemed across the counter at any of the
branches of ICICI Banking Corporation Limited or at ICICI Investors'
Services Limited, Mumbai.
| Issue Price |
: Rs. 5000 |
| Redemption Period |
: 5 years |
| Year |
1st |
2nd |
3rd |
4th |
5th |
| Rate of interest for respective year
(%) |
11 |
12 |
14 |
15.5 |
18 |
| Yield To Investor (%) p.a.* |
11 |
11.5 |
12.2 |
12.9 |
13.7 |
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* Subject to TDS as per the then prevailing tax laws
- If the investor holds till maturity, he earns an annualised yield
of 13.7% per annum.
- The yield to the investor would vary depending on if and when he opts
for early encashment. The above table shows the yield to investor if
he opts for encashment at the end of each year.
TAX SAVING BOND
| Option |
I |
II |
III |
| Tax Benefit Available |
Sec 88 |
Sec 88 |
Sec 54 EA |
| Issue Price (Rs.) |
5,000/- |
5,000/- |
5,000/- |
| Redemption Period |
3 years |
3 yrs 3 mnths |
3 years |
| Face Value |
5,000 |
7,350 |
5,000 |
Interest Rate **
(payable annually) |
12.5% |
Zero Coupon Bond (YTM 12.6%)* |
12.5% |
Yield to investor (%)
(Including tax benefits) |
22.3 |
20.6 |
20%* |
40%* |
60%* |
80%* |
| 14.2 |
16.1 |
18.0 |
20.1 |
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The investor may choose any of the following options in respect of the
Tax Saving Bond:
* Percentage of Capital Gains in amount invested
** Subject to TDS as per the then prevailing tax laws
Full and firm allotment is assured for all valid applications for the
Tax Saving Bond.
By investing in the Tax Saving Bond, investors can save tax under Sec88
(Options I and II), and long term Capital Gains tax under Sec 54 EA (Option
III) of the Income Tax Act, 1961.
- Under Option I, an investor can invest up to Rs.70,000 in the
financial year out of his income chargeable to tax, and under section
88 of the Income Tax Act, 1961, claim tax rebate @ 20 per cent of the
aggregate value of the bonds allotted and earns 12.5 % interest annually.
- Under Option II also, the investor can avail tax benefit under Section
88. The bond is in the nature of a deep discount bond with a
three year three month maturity, wherein Rs.5,000 becomes Rs.7,350 in
3 years 3 months yielding a return of 12.6% per annum.
- Under Option III, the investor can avail of tax benefits under Section
54 EA by investing the net sale consideration (from the sale of shares,
house or any other capital asset) for 3 years, while earning an interest
of 12.5 % per annum.
REGULAR INCOME BOND
The investor may choose any of the following options in respect of the
Regular Income Bond :
| Option |
I |
II |
III |
IV |
| Face Value |
5000/- |
5000/- |
5000/- |
5000/- |
| Redemption Period |
5 years |
5 years |
5 years |
5 years |
| Interest Rate %* |
13.00 |
13.25 |
13.75 |
14.00 |
| Frequency of interest payment |
Monthly |
Half-Yearly |
Annually |
Annually |
| YTM(%) p.a.#* |
13.8 |
13.7 |
13.8 |
14.0 |
| Minimum Application |
3 Bonds |
2 Bonds |
1 Bond |
1 Bond |
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# Rounded off to the nearest multiple of 0.1.
* Subject to TDS as per the then prevailing tax rates
Under the Regular Income Bond, an investor can invest
for 5 years and earn regular income on a monthly, half-yearly or annual
basis under Options I, II or III respectively.
A new option of seven-year Regular Income Bond with
an interest rate of 14% p.a., payable annually has been introduced in
this issue.
MONEY MULTIPLIER BOND
The investor may choose any of the following options
in respect of the Money Multiplier Bond :
| Option |
I |
II |
| Issue Price (Rs.) |
4,000/- |
4,700/- |
| Face Value (Rs.)* |
8,000/- |
50,000/- |
| Redemption Period |
5 years 4 months |
18 years |
| YTM (%)#* |
13.9% |
s14.0% |
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* Subject to TDS as per the then prevailing tax laws.
# Rounded off to the nearest multiple of 0.1.
- Under Option I, the invested amount doubles in 5 years and 4 months,
yielding the investor 13.9% per annum.
- The savings under Option II yield 14 % per annum and converts a saving
of Rs.4,700/- into Rs. 50,000/- in 18 years.
The 18 year option has been devised to cater to needs
of various investors who would want to save for their children in order
to meet the expenses incurred at the time of their marriage, higher education
or any other expenses to secure their future.
sThe ICICI Safety Bonds - January'99 issue provides the
investors another opportunity to save at market related interest rates
and offers various redemption periods and options to chose from. The Investor
can opt for the monthly income option at attractive rates or lock in for
18 years with no intermediate coupon payments. Encash bond offers liquidity
with returns whereas Tax Savings Bond can help the Investor plan his taxes
optimally. The Easy Instalment Bond helps the small saver to invest his
savings in ICICI Safety Bonds in easy instalments.
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