ICICI to launch bond issue

These bonds have been rated by the three premier credit rating agencies: AAA by Crisil, LAAA by ICRA and AAA by Care. The ratings signify highest safety with regard to the timely payment of principal and interest.ICICI safety bonds July’98 offer various options under three types of bonds regular income bond, money multiplier bond (in the nature of deep discount bond) and tax saving bond.

Under the regular Income Bond, an investor can invest for five years and earn regular income on a quarterly,half-yearly or annual basis under Option I, II or III, respectively. The investor can earn regular income at the rate of 14 per cent per annum under option III,13.50 per cent per annum under option II and 13.25 per cent under option I. The face value of each bond is Rs 5,000. A minimum of three bonds needs to be subscribed to under the quarterly option. The minimum subscription for the semi-annual and the annual income options are two bonds and one bond respectively.

Under the money multiplier bond, an amount of Rs 4000 (and in multiple amounts of Rs 4000 thereafter) can be placed under the three options available. Under option I, the invested amount becomes one and a half time (Rs 6000) in three years and three months, yielding the investor 13.3 per cent per annum. The savings under option II yield 13.9 per cent per annum thus doubling the savings in 5 years and four months. Option III of the money multiplier bond yields 14.2 per cent per annum multiplying the saving by four times in 10 years fivemonths.

By investing in the tax saving bond, investors can save tax on capital gains under Section 54 EA of Section 54 EB of the Income Tax Act 1961. Full and firm allotment is assured for all valid applications for the tax saving bond.By investing in tax saving bonds, investor can avail exemption from payment of long term capital gains tax. Under option I, the investor can avail of tax benefits under section 54 EA by investing the net sale consideration (from the sale of shares, houses or any other capital asset) for three years, while earning an interest of 12.5 per cent per annum.