1 min read.Updated: 07 Jul 2021, 01:46 PM ISTLivemint
The Tranche-I of the unsecured NCD has a base issue size of ₹100 crore with an option to retain oversubscription up to ₹900 crore, aggregating up to ₹1,000 crore
The base issue of the Tranche-I of IIFL Home Finance Ltd’s non-convertible debenture (NCD), which opened for subscription on Tuesday, got fully subscribed on Day 1 on the back of demand from retail investors.
The Tranche-I of the unsecured NCD has a base issue size of ₹100 crore with an option to retain oversubscription up to ₹900 crore, aggregating up to ₹1,000 crore. The NCD, which will offer an interest rate payout of up to 10%, is part of the company’s plan to garner up to ₹5,000 crore.
According to the company, retail investors put in bids worth ₹92 crore, which made approximately 70% of the total subscription. Overall, the issue was subscribed 1.2 times on Day 1 with total bids received worth ₹122.05 crore.
The NCD has a face value of ₹1,000 with a minimum application size of ₹10,000, and in multiples of one NCD thereafter.
There will be three interest payment options, wherein the coupon rate will be 9.6% for the monthly mode and 10% for annual. The company didn’t provide the coupon rate for the cumulative option. There is only one tenor option available in this NCD issue, which is 87 months.
The NCD of the technology-driven housing finance company has been rated AA with a stable outlook by Crisil Ratings Ltd and AA+ with a negative outlook by Brickwork Ratings India Pvt. Ltd. The AA rating is considered to have a high degree of safety regarding timely servicing of financial obligations; however, they are not as safe as AAA-rated issues.
Investors should note that unsecured NCDs carry a significant amount of risk. On the other hand, secured NCDs are backed by specified assets of the company.
According to experts, retail investors can look at having some part of their debt portfolio in NCDs, but before investing they should look at the credit profile of the company and must stay away from issues rated below AA.