Mahindra and Mahindra Financial Services (Mahindra Finance) is planning to raise up to Rs 29,000 crore through issuance of non-convertible debentures (NCDs) and seeking shareholders’ nod for the same, said a PTI report.
In a notice to shareholders, the company said it “proposed to offer or invite subscriptions for secured or unsecured redeemable NCDs, including subordinated debentures in domestic and/or international market in one or more series or tranches, aggregating up to Rs 29,000 crore on a private placement basis”.
NCDs, including subordinated debentures issued through private placement, constitute a significant source of borrowings for the company. “The aggregate borrowings of the company as on March 31, 2017, were Rs 34,670.4 crore, of which NCDs including subordinated debentures comprised Rs 16,391.2 crore,” it added. The scrip was trading 0.63 per cent higher at Rs 333 on the BSE, according to the PTI report.
NCDs are rated by the third party which are the rating agencies like CRISIL, ICRA, etc. It is always advisable to buy NCDs as per the highest rating. These ratings are denominated like AAA, AA+, AA-, and so on.
NCDs are offered on coupon rates. The higher the risk, the higher return you may get from the companies depending on how much risk actually the company is going to take in future terms.
NCDs can be bought either through a public issue, that is when the bonds are issued for the first time, or through the secondary market where you can invest in bonds through a demat trading account.