EPFO Panel Clears Participation in DMEDL Bond Buyback Offer; CBT Decision Pending

The Investment Committee of the Employees’ Provident Fund Organisation (EPFO) has reportedly approved a proposal to participate in the 4th voluntary buyback offer for non-convertible debentures (NCDs) issued by Delhi Mumbai Expressway Development Limited (DMEDL). 

As per news reports, the proposal was reviewed at the committee’s meeting held last month. The final decision on participation will be taken by the Central Board of Trustees (CBT), the EPFO’s apex decision-making body.  

The CBT is scheduled to meet on March 2. The meeting will also consider the interest rate for nearly 30 crore EPFO members for the current financial year. 

Details of the Buyback Offer 

DMEDL has proposed a buyback of bonds worth ₹1,250 crore. In the earlier 3 rounds, the repurchase price was set at ₹1.05 lakh per bond. In the current round, the buyback price has been lowered to ₹1.03 lakh per bond.  

This change in pricing formed part of the committee’s review. The committee examined the implications of participating at the revised price. 

Yield Comparison Examined 

Portfolio managers presented an assessment comparing the existing returns from the bonds with potential reinvestment outcomes. The current annualised yield on the DMEDL bonds stands at 7.97%. The indicative reinvestment yield was estimated at around 7.6%.  

This estimate shows a weighted average across Category I and Category II assets within EPFO’s investment framework. The comparison was considered as part of the decision-making process. 

Liquidity Considerations 

Participation in the buyback would generate immediate liquidity for the fund. However, reinvestment of these proceeds may involve placing funds in assets offering lower returns. 

This difference in yields was noted during the committee’s review. The decision involves balancing liquidity with existing income levels from the bonds. 

Final Decision Pending 

While the investment committee has approved participation in principle, the matter now rests with the CBT. The board will take a final call on whether EPFO will take part in the buyback. 

Its decision is expected following deliberations on both the buyback and the annual interest rate for subscribers. 

Read More: Claim Relief: EPFO to Directly Transfer ₹30.52 Crore to Aadhaar-Linked Accounts of 7.11 lakh Inactive Accounts! 

Conclusion  

The investment committee has approved the proposal, but participation in DMEDL’s buyback will depend on the CBT’s final decision. The board is expected to review the yield impact before taking a call. 

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