- Date : 27/09/2023
- Read: 3 mins
Explore the potential of Aditya Birla Finance's NCDs, offering up to 8.09% returns. Is this investment opportunity right for you? Read this article to know more.
Are you a conservative investor? Seeking to diversify your fixed-income portfolio beyond traditional fixed deposits? Aditya Birla Finance Limited’s (ABFL) Non-Convertible Debentures (NCDs) offer an opportunity to grow your wealth. With approximately 1% or 100 basis points higher returns compared to deposits from top-rated lenders, these NCDs are generating interest among investors. This article discusses in details the key features that help you make informed decision.
Highlights:
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Public issue of secured NCDs worth Rs 1,000 crore.
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Coupon rates range from 8.00% to 8.10% p.a.
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Tenor options of 3 years, 5 years, or 10 years.
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Green shoe option of Rs. 1,000 crore.
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ABFL is a leading financier and wealth service provider.
Also Read: A beginner’s guide to investing in non-convertible debentures
This issue presents investors with an enticing investment opportunity, offering attractive coupon rates and effective yields. With a minimum application size of Rs 10,000 and tenor options of 3 years, 5 years, or 10 years, these NCDs are a smart investment choice. Solid track record and AAA ratings suggest the issue is secure. However, it's important to remember that all investments carry inherent risks, including credit risk and potentially lower liquidity.
About the issuer
ABFL offers integrated financing, lending, and wealth services to retail, HNI, ultra HNI, micro, small and medium enterprises, and corporate customers. The company is offering Rs 1,000 crore in secured NCDs, with a Rs 1,000 crore green shoe option, totalling Rs 2,000 crore.
Key features are mentioned below:
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Coupon rates vary between 8.00% p.a. to 8.10% p.a. for yearly options, with effective yields ranging from 7.99% p.a. to 8.09% p.a.
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NCDs are offered with tenor options of three years, five years, or ten years with monthly, yearly, or cumulative interest payment frequency.
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The issue opens on September 27, 2023, and closes on October 12, 2023.
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The minimum application size is Rs 10,000 (10 NCDs) across all series collectively and in multiples of Rs 1,000 thereafter.
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At least 75% of the net proceeds will be utilised towards onward lending, financing, and repayment of interest and the principal of existing borrowings.
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Up to 25% of the net proceeds will be used for general corporate purposes.
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The NCDs have been rated IND AAA Outlook Stable by India Ratings & Research Private Limited and [ICRA] AAA (Stable) by ICRA Limited.
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Trust Investment Advisors Private Limited, Nuvama Wealth Management Limited, JM Financial Limited, and A.K. Capital Services Limited are the lead managers of the Issue.
Associated risks
NCDs with AAA ratings still carry credit risk, and past defaults have occurred. NCDs may lack liquidity compared to debt funds. ICRA and India Ratings & Research highlight moderate risks in Aditya Birla Finance’s asset quality and operating performance.
Also Read: Guide to Investing in NCDs: Considerations and Benefits
Disclaimer: This article is intended for general information purposes only and should not be construed as investment or tax advice.
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