As reported by The Economic Times: National Highway Authority of India could become the first issuer of tax free bonds this year, market sources say.

March, this year, Government of India permitted a few designated infrastructure companies to rise about Rs.60, 000 crore through issuances of tax free bonds. This amount has been increased from Rs.30, 000 crore last year.

National Highway Authority of India can raise upto Rs10, 000 crore through the tax free bonds.

According to market sources, NHAI could be closely followed by Housing and Urban Development Corporation in issuing the tax free public bonds.

National Highways Authority of India, Indian Infrastructure Finance Company Limited, Indian Railways Finance Corporation, SIDBI, NHB and HUDCO has been allowed to raise these tax free bonds this year.

Issuers are awaiting the approval from Central Board of Direct Taxes on the spread over yields on government securities that issuers can offer the investors who are putting their money in these bonds, which is likely to come by the end of this month.

Last year the NHAI bonds were oversubscribed by almost five times. The issuers last year offered coupons between 7.90-8.50% on these bonds, with pre tax returns upto almost 10.5-11.6%.