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Business News/ Money / Personal Finance/  Indiabulls Housing Finance issues NCDs, offers 10.75% interest. Should you invest?
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Indiabulls Housing Finance issues NCDs, offers 10.75% interest. Should you invest?

Non-convertible debentures are fixed-income instruments, issued by companies in the form of a public issue to accumulate long-term capital appreciation. Investors can choose different tenures of investment which could be 24 months, 36 months, 60 months, 84 months and 120 months.

Credit rating of these instruments is AA/Stable by Crisil and ICRA. Premium
Credit rating of these instruments is AA/Stable by Crisil and ICRA.

Indiabulls Housing Finance has issued the public issue of secured redeemable non-convertible debentures (NCDs). The coupon rate for these securities is up to 10.75 percent per annum. This is Tranche VI and the minimum amount for which one can invest is 10,000.

We give a lowdown on these instruments in case you are willing to invest. 

What are non-convertible debentures?

These are fixed-income instruments, issued by companies in the form of a public issue to garner long-term capital appreciation. They offer better rates of interest as compared to convertible debentures.

ALSO READ | Should you invest in corporate fixed deposits for higher returns?

What are different tenures of investment investors can opt for?

Investors can choose different tenures of investment which could be 24 months, 36 months, 60 months, 84 months and 120 months. Allotment can be made on a first come first serve basis.

What are different tenures of investment?

Different tenures of investment include monthly, annual and cumulative. 

What is the credit rating of these securities?

Credit rating of these instruments is AA/Stable by Crisil and ICRA. Crisil Ratings’ website says the issuers with AA rating are considered to have a high degree of safety regarding timely servicing of debt obligations. Debt exposures to such issuers carry very low credit risk.

ALSO READ | Your Questions Answered: What are corporate FDs and how are they different from bank FDs?

What is the value of the total issue? 

The company has made a public issue of 100 crore with a green shoe option of 100 aggregating up to 200 crore being offered by way of this Tranche VI Prospectus. The issue opened on May 13 and will close on May 27.

Is it wise to invest in non-convertible debentures?

Although corporate debt instruments offer higher interest rates to investors, they are generally riskier when compared to the safer instruments such as bank fixed deposits (FDs).     

Therefore, it is generally recommended to stick to AAA-rated instruments. 

Are there risk factors of investing in NCDs?

There are a number of risk factors mentioned in the Prospectus. One of them states that the company is vulnerable to the volatility in interest rates and it may face interest rate and maturity mismatches between its assets and liabilities in the future which may cause liquidity issues.

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Published: 24 May 2024, 09:11 AM IST
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