Bharat Bond ETF, India's first-ever corporate bond exchange traded fund with a fixed maturity of 3 years and 10 years, has fetched Rs 12,395 crore from its debut offer. The Bharat Bond new fund offer (NFO) received great response from investors with issue subscribed nearly 1.8 times. The base size of the issue was Rs 7,000 crore.
The Bharat Bond NFO, which is managed by Edelweiss Asset Management Company, opened for public subscription on December 12 and closed on December 20. For retail investors, the issue was available with a minimum unit size of Rs 1,000 and in multiples of Rs 1,000 thereafter, subject to the maximum investment amount of Rs 2 lakh only.
Edelweiss Mutual Fund's Bharat Bond NFO saw an overwhelming response from all categories of investors. The 3-year category received applications for Rs 6,982 crore and was oversubscribed 2.3 times. In a similar trend, the 10-year category was oversubscribed 1.4 times and received applications for Rs 5,413 crore. The government will retain all the subscription in both the categories to accommodate the demand.
"BHARAT Bond ETF received an enthusiastic response from all categories of investors. Both tenors of ETF were oversubscribed @ Rs 12,400 crore. Government has decided to retain full amount. Participation by about 55,000 retails investors was the highlight of this issue," DIPAM (Department of Investment and Public Asset Management) Secretary Tuhin Kanta Pandey said in a tweet on Tuesday.
The Bharat Bond ETF is expected to list on the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) by December 31. Once it gets listed on the bourses, it will be open for buying and selling.
The exchange traded fund, which will invest only in AAA-rated bonds of public sector companies, combines the features of close-ended fund and exchange traded fund, which virtually makes it an open-ended target maturity product.
The ETF will at least consist of 8 PSU entities and no single bond issuing company will account for a weigh over 15 per cent, as per ETF guidelines. The Debt ETF shall comprise fixed income securities such as bonds, credit-linked note, debentures, promissory notes, Government of India bonds (GoI Bonds) etc. The top three holdings in the three-year scheme are REC, NABARD and Power Grid while the 10-year scheme has NHAI, IRFC and REC as its top three constituents.
Edited by Chitranjan Kumar