PremiumMUMBAI: CredAvenue has facilitated a Rs337.5 crore Market Linked Debenture (MLD) issuance in the microfinance sector through its online bond platform “Plutus". The MLD issue from Spandana Sphoorty Financial Limited (SSFL) received participation from HNI investors, family offices and corporate treasuries, the company said in a release on Wednesday. SSFL MLDs have been assigned a rating of IND PP-MLD A/Stable by India Ratings.
The MLD was issued at an 11% yield and will mature in 30 months. Investors will receive 11% if the price of the benchmark government security (G Sec) is at least 75% of its current price at maturity. If it falls to 50-75%, investors will get a 10.5% yield. If, however, the G Sec price drops below 25% of the current value investors will get just their principal back. In other words, investors are likely to take a hit only if interest rates rise sharply leading to a drop in G Sec prices.
"There is enough liquidity on Plutus from mutual funds and NBFCs for investors to sell the MLDs before maturity and realise the gains on them," said Sarath Bhaskaran, Head, Outreach, Plutus by CredAvenue. The face value of each MLD is ₹1 lakh, making it accessible for individual investors in the secondary market for buying and selling. If a listed MLD is sold after a holding period of 1 year, capital gains in it are taxed at 10%. For shorter holding periods, capital gains are taxed at slab rate.
Commenting on the development, Padmaja Reddy, Founder and Managing Director of SSFL, said “We are excited to partner with CredAvenue in this landmark transaction. It is good to see heightened interest from retail investors in both our company and the microfinance sector. Funds raised through this issuance will help us scale our business profitably at an accelerated pace."
“Plutus platform today offers retail investors a unique opportunity to invest in various debt instruments catering to their lifecycle requirement. One of the products on the platform, viz. Market Linked Debentures (MLDs) has seen strong traction with retail investors. Our platform has cumulatively placed around Rs. 2,500 crores of MLDs in less than nine months," said Bhaskaran.
Spandana was started as an NGO in 1998 in Guntur by Reddy. In 2015 it transformed into an NBFC-MFI, licensed by the Reserve Back of India . Today it is present in 18 states across India with its head office in Hyderabad. It has over 1,000 branches with customer base of around 25 lakh.
