Edelweiss’ ECL Finance: ECL Finance, the non-banking arm of Edelweiss group has come out with a non-convertible debenture (NCD) issue that opened for subscription yesterday. The interest rate on offer for different tenors range between 9.25-9.85% a year. The offer comes with with varying maturities of 3, 5 and 10 years. The issue will close on August 16. The issue size is 50,00,000 secured, redeemable non-convertible debentures of face value of Rs 1,000 each. The company plans to raise up to Rs 2,000 crore through the NCD issue.
Of the Rs 2,000 crore on offer, Rs 600 crore is allocated for retail investors and Rs 600 crore for HNIs (high net worth individuals).. The remaining will be divided among corporates and qualified institutional buyers (QIB). The NCD issue has been rated AA/Stable by ICRA and CRISIL.
The minimum application size for the NCD is Rs 10,000 (10 NCDs) and in multiples of Rs 1,000 (1 NCD) thereafter. “The NCDs proposed to be issued under this Issue have been rated ‘CRISIL AA/Stable’ (pronounced as CRISIL Double A rating with Stable outlook) and, ‘[ICRA]AA (stable)’ (pronounced as ICRA double A with Stable outlook),” ECL Finance said in its product note.
In recent times, given a volatile stock market and lower returns on bank deposits, there has been a flurry of NCD. In May, JM Financial had too come out with an NCD. For those looking for fixed income as opposed to equities, NCD is an option to consider.
Notably, since NCDs provide higher return than the risk free rate, they expose investors to risk. However, the risk is lower than that of equities but it is certainly more than bank fixed deposits, Government bonds, and other Government schemes such as PPF, Post office, NSC etc.