ICICI’s lending operations have been increasing substantially over the last few years. To meet these enhanced demands for financial assistance, the Company has once again taken the decision to issue bonds.

• Fact sheet for ICICI safety bonds

  These bonds will be unsecured redeemable bonds in the nature of Debentures aggregating Rs 2.5 bn with a right to retain over subscription up to Rs. 2.5 bn. The proceeds of these issues including over subscription if any, would be utilised for ICICI’s business operations after meeting the requirements. In addition to this, the proceeds of the issue will also meet the expenses of the present Issue.

  This issue of the ICICI Safety Bonds will open on the 5th of December. The issue will end on the 23rd of December. The current issue of ICICI Safety Bond in the form of Debentures will offer various options under four different types of bonds –

  • Tax Saving Bond,
  • Regular Income Bond,
  • Money Multiplier Bond and
  • Pension Bond.

  • Tax Saving Bond -
    Under the Tax Saving Bond there will be two options. The investors can choose either/both of the options in respect of Tax Saving Bonds. The proceeds from this bond shall be deployed towards infrastructure projects in accordance with the Income-tax Rules. Investors would be able to avail of rebate under Section 88 of the Income Tax Act, 1961 by investing in this Bond. The 2nd option of the Tax saving bond is a deep discount bond on which no periodic return is payable.
     

  • Regular Income Bond –
    Under the Regular Income Bond, there will be three options to choose from. Under the 1st option, the yield to the investor would be 11.3%, which will be paid monthly whereas in the second option, it would be 11.4% and would be paid half-yearly. Under the third option the yield to the investor would be 11.5%. The interest on this Bond will be paid annually.
     

  • Money Multiplier Bond –
    Under this Bond, there would be 4 options. The face value for each of these bonds would be Rs 5,000. Whereas the yield to the investor for the first option would be 11.1%, the yield on the other three options would be 11.3%.
     

  • Pension Bond -
    The monthly pension would comprise interest and principal repayments in form of annuity. There shall be no repayment of lump sum principal at the time of maturity of the Bond. The pension would be payable monthly after waiting period of 4 years, 6 years and 10 years for the three options respectively. The yield to the investor on the Pension Bond would be 10.6%.

  For the Investors, it would make better sense to invest in funds in short to medium term bonds rather fixed deposits as currently the bonds are offering better returns. From this perspective the Tax Saving Bonds, which will offer an effective yield of 19.7% to 21.7% (including the tax benefits) and the Regular Income Bonds, which will give an effective yield of 11.3% to 11.5% (including the tax benefits) are suitable.

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