Punjab bonds trading at Rs 7,000 premium

The Punjab Infrastructure Development Board's bonds are being traded at a premium of over Rs 7,000.

"According to the National Stock Exchange (NSE) statement, the PIDB infrastructure bonds were recently traded in the wholesale debt market segment of the exchange at a premium of Rs 7,450 per bond of Rs 100,000 face value," said Vinny Mahajan, Punjab disinvestment director.

The PIDB has collected Rs 309.27 crore through infrastructure bonds, issued in March 2001, for implementing roads and bridges projects in the state.

The 7-year bonds could be traded after five years from the date of allotment, Mahajan said.

The major infrastructure projects completed with the funds collected from bond include construction of bridges over the river Sutlej on the Jagraon-Nakodar Road, the river Beas on the Gurdaspur-Mukerian Road and the river Soan, four laning of the Mohali-Kharar road up to Desumajra and construction of a road between Zirakpur and Patiala Road.

The work on another 15 infrastructure projects was expected to be complete in six months, Mahajan added.

At the time of issue of bonds, credit rating agency ICRA had rated them "LA(SO)" indicating adequate safety of timely payment of interest and principal and it has retained the rating third year in succession.

This, according to Mahajan, boosted the confidence of investors in the infrastructure bonds. The PIDB had been making timely payment of annual interest to all its bond holders, the divestment director added.

The infrastructure development board plans to start collecting user charges on infrastructure projects, which will be used to repay interest and principal to bond holders, after meeting their operation and maintenance costs.

The annual interest burden of about Rs 43 crore was being met out of the infrastructure fee collected by the PIDB on sales of petrol and certain categories of agricultural produce, the divestment director added.