Bharat Bond ETF Oversubscribed; Gathers Rs 12,000 Crore

On Friday, the central government's ambitious Bharat Bond ETF closed for subscription with an over-subscription of 1.7 times, garnering Rs 12,000 crore to be utilised for capital expenditure towards PSUs (Public Sector Units). The base size of the issue was Rs 7,000 crore.

"India's first corporate Bond ETF, Bharat Bond ETF, has received a great response from investors across different segments. The issue was over-subscribed approximately 1.7 times, collecting about Rs 12,000 crore. Information is subject to further update," said DIPAM (Department of Investment and Public Asset Management) Secretary Tuhin Kanta Pandey over Twitter.

The exchange-traded fund (ETF) will only invest in AAA-rated bonds of public sector companies and will have target maturity structures.

The 3-year maturity ETF will follow the Nifty Bharat Bond Index-April 2023 and the one with a 10-year maturity will follow the Nifty Bharat Bond Index-April 2030.

On 5 December 2019, the yield of Nifty Bharat Bond Index-April 2023 is 6.69 percent and the Nifty Bharat Bond Index-April 2030 is 7.58 percent.

The investors holding these ETFs for over 3 years will get the benefit of capital gains with indexation.

The ETF will invest in constituents of the Nifty Bharat Bond Indices, consisting of public sector companies. Bharat Bond Funds of Funds (FOF) is also being launched for investors who do not have demat accounts.