1 min read.Updated: 02 Jul 2021, 05:13 PM ISTLivemint
The secured issue of NCDs has been rated AA by Care Ltd and AA with a negative outlook by Icra Ltd. These ratings mean that the debentures carry low credit risk but are not as safe as AAA-rated instruments
Housing finance company Piramal Capital & Housing Finance Ltd will launch a public issue of non-convertible debentures (NCDs) with an aim to raise ₹200 crore. The issue, which has been rated AA, will offer an effective yield in the range of 8.10-8.99%.
The issue will open for subscription on 12 July and close on 23 July.
The secured issue of NCDs has been rated AA by Care Ltd and AA with a negative outlook by Icra Ltd. These ratings mean that the debentures carry low credit risk but are not as safe as AAA-rated instruments.
There are six investment options and investors can lock in money for a period of 26, 36, 60 and 120 months in these secured NCDs.
Secured NCDs are backed by specified assets of the company.
There are four categories of investors in an NCD; Category I is for institutional investors; Category II is for non-institutional; Category III is for high net-worth individuals; and Category IV is for retail investors.
Piramal Capital’s NCD issue will pay the highest effective yield of 8.74% to Category I and II investors for a duration of 120 months. For Category III and IV investors, the highest effective yield is 8.99% for 120 months.
The issue, which will be listed on NSE and BSE, has a face value of ₹1,000 with a minimum application size of ₹10,000, and in multiples of one NCD, thereafter.
Generally, investment advisers suggest that retail investors should stay away from NCD issues and those individuals who can take higher risks within the debt category should go with them.
Moreover, investors should note that redeeming NCDs before maturity might be a challenge, as the Indian debt market is not that deep. Also, the interest earned on these instruments is taxed at your income tax slab rate.
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