The recent issue of tax-free bonds – that is, the interest is tax free – by the National Highways Authority of India (NHAI) has listed on the NSE. There are two bonds – a 10 yr at 8.2% and a 15 yr at 8.3%. You can also buy these bonds now, if you have a broker. (The codes are NHAI-N1 and NHAI-N2)

Note: Please read the excellent comments by Anon. The interest rate is a weird beast which I've had to use XIRR to calculate.

Since the interest is paid once a year on Oct 1, every passing day accumulates interest inside the bond, so the price keeps going up. The bonds are Rs. 1000 each, so if the yield remains the same, they will go from Rs. 1000 on Oct 1 all the way to Rs. 1082 (on the 10 yr) on Oct 1 the subsequent year. (Actually it will be till Sep 16, which is the record date, but I'm not going there!). Interest will be paid and the bond price will fall by that amount (Rs. 82 in this case).

Here’s a sheet that shows you updated calculations based on current prices:

I’ve included the yield calculation for the 30% and 20% brackets (I doubt the 10%’ers will care)

The listing has been good, at 1032 / 1041, which is about 3% higher. That’s not great by equity standards , but for bonds it’s a nice deal. Let’s wait for the three others (PFC, IRFC and HUDCO) to list as well.

(Bookmark this page – it will update prices automatically, you can come back next month to check, if you like)