Muthoot FinCorp Limited’s ₹500 crore public issue of secured, rated and redeemable non-convertible debentures (NCDs) is open for subscription until November 5.
The issue offers effective yields of 8.89% to 9.25% across four tenure options of 24, 36, 60 and 72 months.
The issue has a base size of ₹200 crore and a green shoe option of ₹300 crore. Each NCD has a face value of ₹1,000.
According to the company’s issue documents, the proceeds will be used for onward lending and financing, repayment or prepayment of existing borrowings, and general corporate purposes.
Should you invest?
The headline yield alone may not be enough to determine whether these NCDs suit your portfolio. Investors should assess the issuer’s credit risk, the tenure for which their money will be committed, and whether they can hold the investment until maturity.
The NCDs have been rated CRISIL AA/Stable by CRISIL Ratings and BWR AA+/Stable by Brickwork Ratings India. These ratings reflect the agencies’ assessment of credit risk but do not guarantee repayment or rule out the possibility of a downgrade.
The instruments are secured, meaning they are backed by specified security as detailed in the issue documents. Investors should review the nature and terms of that security, along with the applicable risk factors, before investing.
A secured status does not eliminate the risk of delayed or incomplete recovery in the event of a default.
The NCDs are proposed to be listed on BSE’s debt market segment. However, listing does not guarantee that investors will be able to sell them at a desired price or when they need the money.
Investors should compare the offered yields with those of other instruments of comparable tenure and credit risk, while considering their liquidity needs and investment objectives. The final decision should be based on the full tranche prospectus and its corrigendum, rather than the headline yield alone.
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NOTE TO READERS
Disclaimer: This article is for informational purposes only and should not be construed as investment advice. Readers should consult certified experts before making any investment decisions.