Worried about low bank fixed deposit rates, investors gave thumbs-up to Muthoot Finance’s Rs 3,000 crore NCD issue on the second of the offer. The issue got oversubscribed with subscription of Rs 3,672 crore, which was was opened on April 10, 2018. The issue was supposed to close on May 8, 2018. The secured Non-convertible Redeemable Debentures (NCDs) offered 10 investment options with effective yield ranging from 8.00% to 9.00% per annum. Currently, the bank fixed deposits are in the range of 6.25% to 7%.
An NCD is a fixed-income instrument which is issued by a company. These debentures cannot be converted into shares like convertible debentures. An NCD can be both secured as well as unsecured
George Alexander Muthoot, Managing Director of the Muthoot Group, said, “We are very ecstatic to close our NCD issue in 2 days. We are thankful to our customers and investors for the unwavering support and continued trust in us. The NCDs facilitates the company to have long term funds and diversify the borrowings as well.”
He further added, “We had allocated 60 percent of the issue for retail and HNI investor category who are always scouting for an opportunity to have stable and attractive long term returns when there are only limited comparable alternative avenues for investments.”
The issue is rated by two Credit Rating Agencies – CRISIL and ICRA.
The funds raised through this issue will be utilised primarily for lending activities of the company.