After the success of Safety Bonds in December 2000, ICICI is again entering the market this month with a fresh issue. The issue is timed to coincide with tax-planning of investors before the March 31, 2001 deadline.

ICICI's Safety Bond issue opens on February 5, 2001 and will close on February 28, 2001.

The Safety Bonds are unsecured redeemable bonds in the nature of debentures aggregating Rs 5 bn with a green shoe option to retain over-subscription of an equivalent amount.

The current issue of Safety Bonds has 5 different categories, with multiple options under each category. This makes the instrument ideal for a large number of investors with varying investment profiles. The minimum investment is Rs 5,000 per bond. We have outlined below the different categories.

• Tax Saving Bond  The tax-saving bond offer tax benefits under Section 88 (rebate) with a yield of 21.7% to the investor under this option. The second option is deep discount bond with a yield of 19.7% to the investor. The tenures under this category are 3 years and 3 years, 4 months respectively.
   

• Regular Income Bond  In this bond, the yield to the investor is 11% and the interest is payable monthly, half yearly and annually for the three options respectively. The rate of interest offered is 10.5%, 10.75% and 11.0% respectively.
   

• Money Multiplier Bond  These are deep discount bonds. The tenure is 3 years, 10 months under the 1st option and 6 years, 6 months under the 2nd option. The yield to the investor is 11.1 and 11. 3 for the 2 options respectively.
   

• Children Growth Bond  This category of bonds is designed to take care of lump-sum expenditure like education and marriage requirements of children. The bond has two options with tenures of 16 years, 9 months and 19 years, 5 months The yield to the investor is 11.3% for both options.
   

• Pension Bond  This category has 3 options for tenures 11 years, 15 years and 18 years. The monthly pension will comprise interest and principal repayments in the form of annuity. There will however be no repayment of lump-sum principal at the time of maturity of the bond. The pension would be payable monthly after a waiting period of 1 year, 5 years and 8 years under the three options respectively, with the yield to the investor being 10.5%, 10.6% and 10.7% respectively.

ICICI's Safety Bonds are a good tax-saving option for investors with an inclination for steady returns and a low risk appetite. Investors who are fully invested in equity can consider investing in it. Although retired investors or those nearing retirement (i.e. above 50 years) are ideally suited for investment in the bonds, even younger investors can take a look at it.

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