The retail portion of the National Highways Authority of India's tax-free bonds may not have been completely subscribed. But market players say that it is one of the highest amounts that has been collected from retail investors. The retail portion which was Rs 4,000 crore raised as much as Rs 3,420 crore.

"There has never been a tax-free bond issue as big as NHAI's, which was open for retail investors. The subscription of Rs 3,420 crore that the company raised is also so far the biggest that any tax-free bond issue has mobilised from the retail category," says Ajay Manglunia, executive vice president at Edelweiss Securities.

In FY 16, the highest portion for retail investors at Rs 1,813 crore was in the Indian Railway Finance Corporation bonds. The issue was subscribed 1.35 times or Rs 2,445 crore. This issue collected almost Rs 1,000 crore more.

Some, however, also say that the timing of the bond issue wasn't so great. When these bonds were launched, funds of retail investors were locked up in other issues. One lead manager points out that retail investors were awaiting refund from Indian Railway Finance Corporation Limited tax-free bond issue, and also from various initial public offerings such as Alkem Laboratories and Dr Lal PathLabs. Once the money started getting refunded (after December 21), Rs 1,000 crore worth of investments flowed into the NHAI issue despite the holidays in last week of December.

Some might have stayed away from the issue as it was the tax planning season. Employers send Investment declaration are in the last month of the calendar year for employees to submit proof of their investments that help in getting income tax deduction. It's in December that many start investing in tax-saving instruments, leaving little room for other opportunities.

Manglunia feels that issues such as Indian Renewable Energy Development Agency's (IREDA's), which opens for subscription on January 8, would see good response. One, the interest rates are higher compared to recent issues. Two, the issue size is also comparative small. And as the equity market is currently not doing well, investors may look at such issues. He feels that the appetite for retail investors for tax-free issue is up to Rs 2,000 crore a month.

While the mini-ratna company will be looking to raise Rs 1,000 crore from the issue, it may consider retaining oversubscription of up to Rs 716 crore, aggregating to Rs 1,716 crore. For retail category, the bond offers a return anywhere between 7.53 per cent and 7.74 per cent for tenures ranging from 10 to 20 years compared.