BHARAT Bond ETF: Edelweiss Mutual Funds to launch second tranche; expects up to Rs 14,000 crore

BHARAT Bond ETF: The two new Bharat Bond ETF series will have maturities of April 2025 and April 2031. NFO will start from 14th July 2020 and end on 17th July 2020.

BHARAT Bond ETF: The ETF will invest in constituents of the NIFTY BHARAT Bond Indices, consisting of AAA rated public sector companies. Photo: Pixabay

BHARAT Bond ETF: After the successful launch of the first series of the government's 'Bharat Bond', Edelweiss Asset Management today announced the launch of the second tranche of BHARAT Bond ETF in July, with two new series. The BHARAT Bond ETF program is an initiative of the Government of India, from the Department of Investment and Public Asset Management and the latter has given the mandate to Edelweiss AMC to design and manage the product. The two new Bharat Bond ETF series will have maturities of April 2025 and April 2031. NFO will start from 14th July 2020 and end on 17th July 2020.

Through the launch of these two new ETF series, Edelweiss Mutual Fund proposes to raise an initial amount of Rs. 2,000 crores with a green shoe option of Rs. 6,000 crores in 2025 Maturity and initial amount of Rs 1,000 crores with a green shoe option of Rs. 5,000 crores in 2031 Maturity based on market demand. The ETF will invest in constituents of the NIFTY BHARAT Bond Indices, consisting of AAA rated public sector companies. BHARAT Bond Fund of Funds (FOF) with similar maturities will also be launched for investors, who do not have demat accounts.

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Speaking on the launch TuhinKanta Pandey, Secretary, DIPAM, Ministry of Finance said, “BHARAT Bond ETF program has achieved some important objectives that were envisioned while creating the blueprint of this program. It has provided aggregate savings in borrowing cost for participating CPSEs/CPSUs/CPFIs. It has provided easy access to investors into Bond markets and adequate Liquidity on exchange with low bid-ask spreads, this will encourage investor participation and help in developing bond markets further. The organic increase in AUM of existing BHARAT Bond ETFs even during these uncertain times resembles investors building confidence with the product. In the upcoming issue, we expect to raise anywhere between 3,000 cr to 14,000 cr. This will help CPSEs in their capex programs in coming months.”

Vikram Limaye, MD & CEO at NSE, said, “The BHARAT Bond ETFs, tracking the Nifty BHARAT Bond Index series, have been successful in increasing retail participation in corporate bond market with more than 50000 retail investors participating in the first two ETFs launched in December 2019. NSE is glad to continue working with Department of Investment and Public Asset Management (DIPAM), Government of India, Edelweiss AMC and other stakeholders in launching more indices within the unique BHARAT Bond Index series that will be tracked by the upcoming tranches of BHARAT Bond ETF. The new BHARAT Bond ETF tranches maturing in 2025 and 2031 will provide more investment choices to fixed income investors.”

Rashesh Shah, Chairman & CEO, Edelweiss group said, “The first launch of BHARAT Bond ETF was highly successful and since then it has seen healthy growth in AUM and good liquidity on exchange. We hope that the BHARAT Bond ETF program achieves its ultimate objective of creating a liquid yield curve for CPSE bonds and helps further the agenda of development of bond markets. We believe that the BHARAT Bond ETF program will keep growing and will provide a safe and secure investment avenue for investors and an easy way for CPSEs to raise funds.”

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