Muthoot Fincorp Rs400 crore NCD issue offers up to 10.2% interest

NEW DELHI: Non-bank finance company (NBFC) Muthoot Fincorp Ltd has launched a non-convertible debenture (NCD) issue, which will offer an effective yield of between 8.57 and 10.20%. The public issue of unsecured as well as secured NCDs will be open for subscription from September 30 to October 26.

The base size of the issue is Rs200 crore with a green shoe option to raise it to ??400 crores.

The issue was rated A + with a stable outlook by Crisil Ltd. According to experts, these ratings mean that bonds carry low credit risk but are not as secure as AAA-rated instruments.

In addition, part of the issue was guaranteed on all of the company’s current and future loan receivables.

Investors can lock in money for a period of 27, 38, 60, 72 and 87 months in these MNTs, which are listed on the ESB. The guaranteed portion of the CRS will be available for terms of 27, 38 and 60 months, while the unsecured CRS will be available for terms of 72 and 87 months.

The maximum effective return payment in the guaranteed part will be 9.10% for a period of 60 months, while it will be the highest of 10.20% for the unsecured part in 87 months.

According to experts, unsecured NTMs are much riskier than secured NTMs because the bonds are backed by the assets of the company.

The DEM has a nominal value of ??1000 with a minimum application size of ??10,000, and in multiples of a DEM, thereafter.

Funds raised through the issuance will be used for working capital and general corporate purposes.

The NBFC has been active in the gold lending industry for over a decade and is headquartered in Kerala.

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