Past few months have witnessed fluryy of activity in the Public issue of Non Convertible Debentures (NCD) by reputed companies. The trend is led by NBFC and Housing Finance companies who desire to bring down their borrowing from banks and in the process also decrease their average cost of funds. Low interest rates offered by Banks and Expectation of lowering of interest rates have attracted investors to these NCD issues. Public Issue of NCDs in recent past and the response are indicated below:
|Rs. In Crore|
|Slno||NCD Issue||Rating||Maximum coupon rate||Base Issue Size||Issue Size With Green Shoe||Date of Issue||Remarks|
|1||M&M Financial Services (MMFSL)||AAA||9%||250||1000||25-05-2016||Subscribed day 1|
|2||Edelweiss Housing Finance||AA||10%||250||500||08-07-2016||Subscribed day 1|
|3||Dewan Housing Finance Ltd (DHFL) Tier 1||AAA||9.30%||1000||4000||03-08-2016||Subscribed day 1|
|4||Dewan Housing Finance Ltd (DHFL) Tier 2||AAA||9.25%||2000||10000||29-08-2016||Subscribed day 1|
|5||SREI Infra||AA+ (BWR)||10%||250||1000||07-09-2016||Open for long time|
|6||India Bull Housing Finance||AAA||9.15%||3500||7000||15-09-2016||Subscribed day 1|
Due to sizable float in recent time, some of these NCDs are available at reasonable due to excess supply. These are summarised below:
|Name of NCD||MMFSL||EHFL||DHFL Tier I||DHFL Tier II|
|No. of years||10||10||10||7|
|FV with accrued interest||1026.91||1018.1||1009.67||1003.52|
|LTP ( Last Traded Price)||1043||1029||1,004.00||996.00|
|Last Traded Date||23-09-2016||23-09-2016||23-09-2016||23-09-2016|
|NSE Code||EHFLNCD N6||DHFL NC||DHFL NP|
|interest due date||06-Jun-17||19-07-2017||16-08-2017||09-09-2017|
MMFSL(Mahindra & Mahindra Finance Ltd.) NCDs, which are AAA have been witnessing good demand and are ruling at YTM of just 8.59. This shows the confidence of investors enjoyed by the company. EHFL (AA rated) and DHFL 9.3% & 9.25% NCD are available at reasonable YTM* of 9.71%, 9,26% and 9.3% respectively.
*YTM i.e. Yield to Maturity for a bond is the total return, interest plus capital gain, obtained from a bond held till its maturity. It is expressed as a percentage and tells an investor what his return on investment will be if he purchases the bond and holds on to it until the redemption of the bond.
With several more NCD issues and declining interest rates, Debt market is set to witness more activity and attract attention of investors.