EPFO gets nod to take part in DMEDL’s buyback offer

NEW DELHI: The investment committee of the Employees Provident Fund Organisation (EPFO) in its meeting last month has approved the proposal to participate in the fourth round of voluntary buyback offer for non-convertible debentures (NCDs) issued by the Delhi Mumbai Expressway Development Limited (DMEDL).

The final decision regarding the Rs 1,250 crore bond buyback will be taken by the central board of trustees (CBT), which is the apex decision making body of the social security organisation, on Monday as it will also decide the interest rate for its nearly 30 crore members for the current fiscal year.

While the first three rounds saw a repurchase price of Rs 1.05 lakh per bond, the current offer has slid to Rs 1.03 lakh per bond. In such a scenario, selling the bond may create immediate liquidity, but it forces the EPFO to put that money into new assets which might pay less than what they are currently earning. The committee also examined the portfolio managers’ rationale by comparing the current annualised yield of 7.97% with the indicative reinvestment yield of 7.6% (weighted average of Category I and II assets.