- Date : 06/01/2023
- Read: 3 mins
IIFL Finance NCD launch
Leading Non-Banking Finance Company (NBFC) IIFL Finance has come out with a new Non-Convertible Debentures (NCDs) issue. The issue was made public on 6th January 2023 and will be allotted on a first-come, first-serve basis. With the NCD issue, the NBFC aims to raise debt capital of Rs.1000 crores. But is the NCD a good choice of investment?
Let’s assess.
Details about IIFL Finance NCD
The value of the NCDs is Rs.100 crores, and the raised capital will be worth Rs.1000 crores. The issue has retained the green-shoe option for oversubscriptions to Rs.900 crores.
The yield promised by the debenture is 9% if you choose to invest for 60 months. Other features of the Non-Convertible Debentures are as follows –
- Different tenures are available for investment – 24 months, 36 months and 60 months.
- If you choose the tenure of 60 months, you can avail of interest payments monthly, annually or on a cumulative basis on maturity. However, the interest is payable annually or on maturity for other tenures.
- The effective annual yield is as follows –
- The minimum application amount is Rs.10,000, and the face value per debenture is Rs.1000
- The NCD is a secured instrument backed by the company’s loans and receivables. It is rated AA with a stable outlook by both CRISIL and ICRA.
- The NCD issue will close on 18th January 2023.
Related - Here's a beginner's guide to NCDs
About the company
IIFL Finance is a leading NBFC with a product portfolio, including retail and corporate loans. Backed by Fairfax, IIFL Finance is raising funds for expanding loan offerings, financing activities, debt refinancing and other general corporate purposes.
Previously, in the financial years ranging from 2011 to 2014, the company had issued bonds repaid, with interest, on time. In 2019, the company made another bond issue worth Rs.4000 crores. To date, the company has repaid Rs.1325 crores of such bonds.
The company boasts of having a low NPA ratio of 2.42% on a gross basis and 1.22% on a net basis. Moreover, after the second quarter of the financial year 2022-23, the company had 85.03% secured loans.
Should you invest?
Given that IIFL Finance has repaid its previous debts, the NCD looks favourable as the company is expected to pay interest and the principal on maturity. The interest rate is also high and can offer you good returns. However, here are a few facts to remember –
- The NCD does not have a AAA rating, which is considered to be the safest.
- Choose a duration that aligns with your financial goals and needs.
So, assess the NCD and invest in it if you want to add a debt component to your portfolio. If you are looking for regular interest income, you can go for the longest tenure of 60 months and get interest payouts every month.
Related - Investing in NCDs? Read this first!
Check out the video to know more about the IIFL Finance NCD issue
Disclaimer: This article is intended for general information purposes only and should not be construed as investment or legal advice. You should separately obtain independent advice when making decisions in these areas.
Leading Non-Banking Finance Company (NBFC) IIFL Finance has come out with a new Non-Convertible Debentures (NCDs) issue. The issue was made public on 6th January 2023 and will be allotted on a first-come, first-serve basis. With the NCD issue, the NBFC aims to raise debt capital of Rs.1000 crores. But is the NCD a good choice of investment?
Let’s assess.
Details about IIFL Finance NCD
The value of the NCDs is Rs.100 crores, and the raised capital will be worth Rs.1000 crores. The issue has retained the green-shoe option for oversubscriptions to Rs.900 crores.
The yield promised by the debenture is 9% if you choose to invest for 60 months. Other features of the Non-Convertible Debentures are as follows –
- Different tenures are available for investment – 24 months, 36 months and 60 months.
- If you choose the tenure of 60 months, you can avail of interest payments monthly, annually or on a cumulative basis on maturity. However, the interest is payable annually or on maturity for other tenures.
- The effective annual yield is as follows –
- The minimum application amount is Rs.10,000, and the face value per debenture is Rs.1000
- The NCD is a secured instrument backed by the company’s loans and receivables. It is rated AA with a stable outlook by both CRISIL and ICRA.
- The NCD issue will close on 18th January 2023.
Related - Here's a beginner's guide to NCDs
About the company
IIFL Finance is a leading NBFC with a product portfolio, including retail and corporate loans. Backed by Fairfax, IIFL Finance is raising funds for expanding loan offerings, financing activities, debt refinancing and other general corporate purposes.
Previously, in the financial years ranging from 2011 to 2014, the company had issued bonds repaid, with interest, on time. In 2019, the company made another bond issue worth Rs.4000 crores. To date, the company has repaid Rs.1325 crores of such bonds.
The company boasts of having a low NPA ratio of 2.42% on a gross basis and 1.22% on a net basis. Moreover, after the second quarter of the financial year 2022-23, the company had 85.03% secured loans.
Should you invest?
Given that IIFL Finance has repaid its previous debts, the NCD looks favourable as the company is expected to pay interest and the principal on maturity. The interest rate is also high and can offer you good returns. However, here are a few facts to remember –
- The NCD does not have a AAA rating, which is considered to be the safest.
- Choose a duration that aligns with your financial goals and needs.
So, assess the NCD and invest in it if you want to add a debt component to your portfolio. If you are looking for regular interest income, you can go for the longest tenure of 60 months and get interest payouts every month.
Related - Investing in NCDs? Read this first!
Check out the video to know more about the IIFL Finance NCD issue
Disclaimer: This article is intended for general information purposes only and should not be construed as investment or legal advice. You should separately obtain independent advice when making decisions in these areas.
