Public Issue of 7th Tranche of ICICI Safety Bonds - March 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 six public offerings under the Umbrella prospectus and
received good response from the Household Savers.
In the seventh tranche, under the series "ICICI Safety Bonds - March
'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 March 10, 1999 and will remain open till March 30,
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 four types of bonds - Tax Saving
Bond, Encash Bond, Regular Income Bond and the Money Multiplier Bond (in
the nature of Deep Discount Bond).
TAX SAVING BOND
The investor may choose any of the following options in respect of the
Tax Saving Bond:
Option
I
II
III
IV
V
Tax Benefit Available
Sec 88
Sec 88
Sec 88
Sec 54 EA
Sec 54 EA
Issue Price (Rs.)
5,000/-
5,000/-
5,000/-
5,000/-
5,000/-
Redemption Period
3 years
3 yrs 3 mnths
5 years
3 years
3 years
Face Value
5,000
7,350
5,000
5,000
5,000
Interest Payment
Annual
Zero Coupon Bond
Annual
Monthly
Annual
Interest Rate **
(payable annually)
12.5%
Zero Coupon Bond (YTM
12.6%)**
13.0%
11.75%
12.5%
Minimum Application
1 Bond
1 Bond
1 Bond
3 Bond
1 Bond
Yield to investor
(%)
(Including tax benefits)**
22.3
20.6
19.6
20%*
40%*
60%*
80%*
20%*
40%*
60%*
80%*
14.2
16.1
18.2
20.5
14.2
16.1
18.0
20.1
* 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 Sec
88 (Options I, II and III), and long term Capital Gains tax under Sec
54EA (Option IV and V) of the Income Tax Act, 1961.
ICICI has introduced two new options (Option III and IV) under
the Tax Saving Bonds. Apart from a three year option offering 12.5% interest
(Option I), investors can now earn 13.0% p.a. interest for five years
(Option III). A monthly income option along with Section 54EA benefit
is also made available (Option IV)
Under Option I, II and III, an investor can invest up to Rs. 70,000
in the financial year out of his income chargeable to tax, and claim
tax rebate @ 20 per cent of the aggregate value of the bonds allotted,
under section 88 of the Income Tax Act, 1961. Option II is in the
nature of a deep discount bond, wherein Rs. 5,000 becomes Rs. 7,350
in 3 years 3 months yielding a return of 12.6% per annum.
Under Option IV and V, the investor can avail of tax benefits under
Section 54EA by investing the net sale consideration (from the sale
of shares, house or any other capital asset) for 3 years. While Option
IV provides for monthly income, Option V provides for annual payment
of interest.
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
* 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.
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
7 years
Interest Rate %*
12.75
13.25
13.75
14.00
Frequency of interest payment
Monthly
Half-Yearly
Annually
Annually
YTM(%) p.a.*
13.5
13.7
13.8
14.0
Minimum Application
3 Bonds
2 Bonds
1 Bond
1 Bond
* Subject to TDS as per the then prevailing tax rates
Under Options I, II or III of the Regular Income Bond, an investor can
invest for 5 years and earn regular income on a monthly, half-yearly or
annual basis, respectively.
Option IV offers a 7 year Regular Income Bond with an interest rate
of 14% p.a., payable annually.
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%
14.0%
* 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.
The ICICI Safety Bonds - March'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.