NTPC Vs HUDCO Bond

I am very much confused between NTPC and HUDCO .Please help me in knowing that between them which is best??

[Kiran Chandar]

I can understand your confusion ,I am comparing both(NTPC and HUDCO) on some common point so after that you can decide in which you should invest.
About Companies

About NTPC and HUDCO:
NTPC and HUDCO both are government-backed organizations.
In comparison NTPC is credited with AAA rating while HUDCO carries a AA+ rating from the rating agencies Crisil and ICRA. Although AA+ rating signifies high credibility in timely servicing of financial obligations, a AAA rating is the highest rating giving a highest credibility to any organization.
Features of Bonds
Both these Tax Free bonds are secured Non-convertible redeemable bonds with a fairly long horizon of 10, 15 and 20 year. Post issue they will be listed on NSE and BSE.
NTPC issue will close on December 16th, 2013 while HUDCO is open till January 10, 2014. Interest Rates Of NTPC and HUDCO:
Both the companies have come out with bonds during high interest rate scenario and so the coupon offered is also on higher side.
. HUDCO bonds is carrying an interest rates of 8.76% , 8.83% and 9.01% payable annually for 10 years (Series 1B), 15 years (Series 2B) and 20 years (Series 3B), respectively for Retail Individual investors .
NTPC bond on other side is offering retail individual investors a rate of 8.66%, 8.73% and 8.91% for 10, 15 and 20 years horizon.
In both the issue, the additional interest rate for retail investors is applicable only to the primary investor and not on the second investor to whom the bond is transferred thereafter.

How to decide in which Should you invest:
When you compare the two companies then NTPC is surely a much favorable considering its Mahartana status and performance. Its AAA rating is also higher than HUDCO signifying the highest safety of invested capital.. However, the interest rate offered is higher in HUDCO bonds reaching to 9% in 20 years horizon.
If you do not require a regular income then there are other avenues which are more lucrative since these bonds do not carry any cumulative option. Also if the bonds get more preference from long term investors with regular income needs you may see lower trading volumes on exchange. This may reduce the capital gains opportunity.
Hence, there are few factors to consider before you invest in tax free bonds. If you need a regular income and have a horizon of more than 10 years, then tax free bond suits well. For any shorter horizon for capital gains investment, it’s wiser to prefer other avenues such as taxable NCDs by corporates..