Bonds/NCDs – OneMint

IIFL Finance Limited 9% NCDs – January 2023 Issue

This post is written by Shiv Kukreja, who is a Certified Financial Planner and runs a financial planning firm, Ojas Capital in Delhi/NCR. He can be reached at shivskukreja@gmail.com

IIFL Finance will be launching its public issue of non-convertible debentures (NCDs) from January 6, 2023. The company wants to raise Rs. 1,000 crore from this issue, with base issue size of Rs. 100 crore and an additional green-shoe option of Rs. 900 crore. The issue is scheduled to close on February 18.

The company is offering interest rate in the range of 8.50% for 24 months and 9% for 60 months. The issue is rated “CRISIL AA/Stable” by CRISIL Limited and “[ICRA] AA (stable)” by ICRA Limited.

Here are some of the salient features of the issue:

Size & Objective of the Issue – Base size of the issue is Rs. 100 crore, with an option to retain oversubscription of an additional Rs. 900 crore, making the total issue size to be Rs. 1,000 crore. The company plans to use the issue proceeds for the purpose of onward lending, financing, refinancing the existing indebtedness and other general corporate purposes.

Interest Rate on Offer, Effective Yield & Tenor of the Issue – The issue will carry coupon rate of 9% p.a. for a period of 60 months, 8.75% p.a. for 36 months and 8.50% p.a. for 24 months. These rates would be applicable for annual and cumulative interest payment options only. Monthly interest payment option is available only for 60 months period and coupon rates for the same would be 8.65% p.a., interest payable on a monthly basis.

Demat & ASBA Mandatory – Investors will not have the option to apply for these NCDs in physical or certificate form as demat account is mandatory to invest in these NCDs. Like equity IPOs, SEBI made ASBA mandatory to apply for these debt issues also effective October 1, 2018. In case of physical applications, you need to sign on the application form as per your bank records for ASBA.

Credit Rating & Nature of NCDs – CRISIL and ICRA have been appointed as the credit rating agencies for this issue. Both CRISIL and ICRA have rated the issue as ‘AA’ with a ‘Stable’ outlook. Moreover, these NCDs would be ‘Secured’ in nature.

Categories of Investors – The company has decided to categorise investors in the following four categories:

Category I – Institutional Investors – 10% of the issue is reserved i.e. Rs. 100 crore

Category II – Non-Institutional Investors (NIIs) – 10% of the issue is reserved i.e. Rs. 100 crore

Category III – High Net Worth Individual Investors (HNIs) including HUFs – 40% of the issue is reserved i.e. Rs. 400 crore

Category IV – Resident Individual Investors (RIIs) including HUFs – 40% of the issue is reserved i.e. Rs. 400 crore

NRIs Not Allowed – Non-Resident Indians (NRIs), foreign nationals and qualified foreign investors (QFIs) among others are not eligible to invest in this issue.

Allotment on First-Come First-Served Basis – Subject to the allocation ratio, allotment will be made on a first-come first-served basis, as well as on a date priority basis, i.e. on the date of oversubscription, the allotment will be made on a proportionate basis to all the applicants of that day on which it gets oversubscribed.

Minimum Investment – An investor needs to invest a minimum of Rs. 10,000 in this issue i.e. 10 NCDs worth Rs. 1,000 each.

Listing, Premature Withdrawal – These NCDs are proposed to be listed on both the stock exchanges, Bombay Stock Exchange (BSE) as well as National Stock Exchange (NSE). The listing will take place within 6 working days after the issue gets closed. Though there is no option of a premature redemption, the investors can always sell these NCDs on either of the stock exchanges.

No TDS – As it is mandatory to have a demat account to apply and get these NCDs allotted, no tax would get deducted at source on the interest payments. However, as the interest income is taxable, you are supposed to disclose it while filing your ITR.

But, in case you decide to close your demat account, you can get these NCDs rematerialised. So, if rematerialised and held in physical form after the allotment, and if the annual interest income is more than Rs. 5,000, TDS @ 10% will be deducted.

Application Form of India Infoline Finance Limited NCDs

Note: As per SEBI guidelines, ‘Bidding’ is mandatory before banking the application form, else the application is liable to get rejected. For bidding of your application, any further info or to invest in IIFL Finance NCDs, you can contact us at +91-9811797407

Edelweiss Financial Services 10.45% NCDs – January 2023 Issue

This post is written by Shiv Kukreja, who is a Certified Financial Planner and runs a financial planning firm, Ojas Capital in Delhi/NCR. He can be reached at shivskukreja@gmail.com

Edelweiss Financial Services Limited is going to launch its public issue of secured and redeemable non-convertible debentures (NCDs) from January 3 i.e. the coming Tuesday. The company expects to raise around Rs. 200-400 crore from the issue.

It is going to offer interest rates between 9% to 10.45% per annum, with maturity periods ranging between 24 months to 120 months. The issue will remain open till January 23.

Salient features of the issue:

Size & Objective of the Issue – Edelweiss expects to raise Rs. 400 crore from this issue, including the green-shoe option of Rs. 200 crore. The company plans to use at least 75% of the proceeds for the repayment or prepayment of interest and principal of its existing loans and the remaining proceeds for other general corporate purposes.

Tenors & Coupon Rates on Offer – Edelweiss has decided to issue these NCDs for a duration of 24, 36, 60 and 120 months. The company is offering interest rates in the range of 9% to 10.45% per annum, with interest payable monthly, annually and on a cumulative basis.

Higher Coupon Rate for Edelweiss Shareholders or NCD/Bond holders – Edelweiss has also decided to offer an additional 0.20% p.a. to the shareholders of the company and/or the holders of the NCDs/bonds issued by any of its subsidiaries including ECL Finance Limited, Nuvama Wealth & Investment Limited, Edelweiss Housing Finance Limited, Edelweiss Retail Finance Limited and Nuvama Wealth Finance Limited. So, even if you hold one equity share of Edelweiss or an NCD of any of the asssociate companies, you will get this additional rate of interest.

Categories of Investors & Allocation Ratio – The investors have been classified in the following four categories and each category will have the below mentioned percentage fixed in the allotment:

Category I – Institutional Investors – 10% of the issue

Category II – Non-Institutional Investors – 10% of the issue

Category III – High Networth Individuals (HNIs), including HUFs, investing more than Rs. 10 lakhs – 40% of the issue

Category IV – Retail Individual Investors, including HUFs, investing Rs. 10 lakhs or less – 40% of the issue

NCDs will be allotted on a first-come first-served basis.

NRI Not Allowed – Non-Resident Indians (NRIs), foreign nationals and qualified foreign investors (QFIs) among others are not eligible to invest in this issue.

Rating of the Issue – These NCDs have been rated “CRISIL AA-/Negative” by CRISIL Ratings for Rs. 100 crore of the issue and “ACUITE AA-/Negative” by Acuite Ratings & Research for Rs. 100 crore of the issue.

Demat & TDS – Demat account is mandatory to invest in these bonds, so the investors will not have the option to apply these NCDs in physical form. Also, the interest income would be taxable with these bonds. However, NCDs taken in demat form will not attract any TDS.

Listing, Premature Withdrawal & Put/Call Option – The company is going to get its NCDs listed on the Bombay Stock Exchange (BSE) within six working days from the date of issue closure. The investors will not have the option to redeem these bonds back to the company before the maturity period gets over, but they can always sell these bonds on the stock exchange anytime they want. However, liquidity remains an area of concern with such NCDs.

There is neither any put option with the investors of these bonds nor there is a call option with the company to pay back early.

Minimum Investment – The investors will be required to apply for at least 10 NCDs in this issue which makes it a minimum investment of Rs. 10,000.

Registrar – KFin Technologies Limited has been appointed as Registrar to the issue.

Application Form of Edelweiss Financial Services Limited NCDs

Note: As per SEBI guidelines, ‘Bidding’ is mandatory before banking the application form, else the application is liable to get rejected. For bidding of your application, any further info or to invest in Edelweiss Financial Services Limited NCDs, you can contact us at +919811797407

RBI’s 7.35% Floating Rate Saving Bonds

This post is written by Shiv Kukreja, who is a Certified Financial Planner and runs a financial planning firm, Ojas Capital in Delhi/NCR. He can be reached at shivskukreja@gmail.com

Investors often seek safe-havens for their hard earned money, and nothing could be more safe than the securities which are issued by the government or the central bank of a country. It is even better if the interest rates earned on these investments are higher than some of the other investment options which are not as safe and secured as these investments are.

One such investment available to the Indian investors is RBI’s 7.35% Floating Rate Saving Bonds (FRSBs). These bonds are issued by the Reserve Bank of India on behalf of the Govt. of India and are open for subscription throughout the year. RBI has given authority to the State Bank of India (SBI), other nationalised banks like Bank of Baroda, Canara Bank, Punjab National Bank (PNB), Bank of India and Union Bank among others, and only four private sector banks, namely HDFC Bank, ICICI Bank, Axis Bank and IDBI Bank, to accept applications for these bonds.

Here are some of the other salient features of these bonds:

Coupon Interest (Floating) & Payment Dates

Interest payable on these bonds is 35 basis points (or 0.35%) per annum higher than the interest payable on the National Saving Certificates (NSCs) which is set and announced periodically by the Govt. of India. Effective January 1, 2023, NSCs carry interest rate of 7% per annum. So, these bonds yield 7.35% per annum to its investors.

This interest of 7.35% per annum is reset on a semi-annual basis based on the fixation of interest rate on NSCs and payable on January 1 and July 1 every year. Interest gets credited to the investor’s bank account electronically.

Who is eligible to invest in these bonds?

1. A person resident in India is eligible to invest in these bonds:
* in her or his individual capacity, or
* in individual capacity on joint basis, or
* in individual capacity on any one or survivor basis, or
* on behalf of a minor as father/mother/legal guardian

2. A Hindu Undivided Family (HUF) is also eligible to invest in these bonds.

Non-Resident Indians (NRIs) are not eligible to invest in these bonds. However, if the holders of these bonds, subsequent to their investments, attain the NRI status, then they can continue to hold on to their investments subject to the provisions of the Foreign Exchange Management Act (FEMA) guidelines.

Investment Limit

There is no maximum limit for investment in these bonds. So, you can invest as much as you want to.

Tax Treatment & Tax Deduction (TDS)

Interest earned by the investors on these bonds is fully taxable as per the tax slab of the investor. Tax gets deducted at source while making periodical interest payments. In case an investor is not liable to pay any tax in a financial year, she/he may submit a declaration in order to avoid TDS deduction.

Issue Price & Minimum Investment Amount

These bonds carry a face value of Rs. 100, and issued for a minimum investment amount of Rs. 1000 and in multiples thereof.

Mode of Issuance

These bonds are issued only in the electronic form and held at the credit of the holder in an account called Bond Ledger Account (BLA), opened with the receiving office of the intermediate bank. However, as a proof of subscription, a certificate of holding is issued to the holder/s of these bonds.

Nomination

Investors may nominate one or more persons as nominee(s) while making their investments, who in the event of death of the bondholder(s) would be entitled to these bonds and the principal and interest payments due thereon. Even a minor could be a nominee in these investments. However, nomination is not allowed if the investment is made in the name of a minor, as such investments will have parents or legal guardians to take care of the investment in case of untimely demise of the minor investor. Investors may even make changes in their nominees subsequent to their investments.

Transferability

These bonds are not transferable, except transfer to a nominee or legal heir in case of death of the holder of these bonds.

Tradability & Collateral

Unlike tax-free and other taxable bonds, these bonds are not tradable in the secondary markets and not even eligible as collateral for availing loans from banks, NBFCs and other financial lenders.

Lock-In Period and Maturity

These bonds are issued for a period of 7 years and you cannot withdraw your investment amount before this period if your age is less than 60 years. In other words, premature encashment is allowed only if the investor is an individual and aged above 60 years.

Lock-in period for investors in the age bracket of 60-70 years is 6 years from the date of issue, while the same is 5 years for individuals aged between 70-80 years and 4 years for individuals aged 80 years and above. So, the shortest lock-in period with these bonds is 4 years before which investors cannot withdraw their money.

Our Take

Personally, I consider these bonds as one of the safest fixed income investments for the Indian investors, with no or least volatility in their principal investment amount as well as coupon interest rate. But, lack of liquidity with no premature withdrawal is its biggest negative factor for a lot of investors. If you need to invest your money for a medium to long term and don’t want to take any risks, then these bonds are meant for you. Definitely go for them!