Tag: NCDs

PNB Housing Finance plans fund raising up to ₹2,000 crore via NCDs

Banking & Finance

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PNB Housing Finance Limited (PNBHFL) proposes to go in for a fund raise of up to ₹2,000 crore through non convertible debentures (NCD) route. This proposal will be taken up at the upcoming board meeting of PNBHFL on November 2, sources said.

This plan to go in for fund raising via NCD route — in tranches — on private placement basis comes on the heels of the PNBHFL Board deciding not to proceed with the ₹4,000 crore preferential allotment deal with Carlyle Group and other marquee investors.

Preferential allotment deal falls through

It may be recalled that the PNBHFL-Carlyle Group deal had hit a roadblock after a proxy advisory firm had red flagged the preferential allotment on the pricing front, contending that it was not in the interest of the promoter (PNB) as well as the minority shareholders of PNBHFL.

Market regulator SEBI had soon after this intervened and asked PNBHFL not to go ahead with the planned preferential issue until the valuation of the shares is done by an independent registered valuer.

Also see: PNB Housing locked in lower circuit after it shelves stake sale plan

PNBHFL had fixed the preferential allotment price at ₹390 per share, lower than the stock price prevailing at that time. The company had preferred an appeal before the securities appellate tribunal (SAT) on the SEBI letter.

A two-member bench of the SAT on August 9 gave a split verdict and directed that its interim order of June 21 will continue till further orders. SAT also restrained PNB Housing Finance from disclosing the voting results (of shareholders) on the fund raise plan.

Post the SAT’s split verdict, SEBI had filed an appeal at the Supreme Court against this verdict.

SC dismisses SEBI appeal

Meanwhile, the Supreme Court on Wednesday dismissed the SEBI appeal against the SAT’s order in the PNBHFL’s ₹4,000 crore capital raising deal with Carlyle Group and other investors, stating that the appeal has become infructuous due to subsequent developments.

A bench headed by Justice L Nageswara Rao was informed by the counsel for PNBHFL that the housing finance company had decided not to proceed with the preferential allotment of shares and warrants to Carlyle Group and that an application has also been moved before SAT for withdrawal of its appeal against a SEBI directive.

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APSEZ raises ₹1,000 crore via NCDs

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Adani Ports and Special Economic Zone (APSEZ) on Monday said the company has raised ₹ 1,000 crore by allotment of secured, redeemable, and non-convertible debentures (NCD) on the private placement basis.

APSEZ in a BSE filing said that NCDs will be listed on the Wholesale Debt Market segment of BSE Limited.

“With reference to above, we would like to inform that the company has raised ₹ 1,000 crore (Rupees One Thousand Crore only) today by allotment of 10,000 rated, listed, secured, redeemable, Non-Convertible Debentures (NCDs) of the face value of ₹ 10,00,000/- each on private placement basis,” it said.

Adani Ports and Special Economic Zone, the flagship transportation arm of the diversified Adani Group, is India’s largest private ports and logistics company.

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Indel Money plans to raise ₹150 crore via NCDs

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Indel Money plans to raise ₹150 crore of funds through secured and unsecured redeemable non- convertible debentures.

The issue includes a base issue size for ₹75 crore with an option to retain over subscription up to ₹75 crore aggregating up to ₹150 crore.

“The funds raised through this issue will be used for the purpose of onward lending, financing, and for repayment and prepayment of principal and interest on borrowings of the company (at least 75 per cent) and general corporate purposes (maximum of up to 25 per cent),” Indel Money said in a statement on Thursday.

The secured and unsecured NCDs come with the face value of ₹1,000 each. The issue opens on September 23 and closes on October 18 with an option of early closure in case of early over subscription.

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NCLAT to hear 63 Moons Technologies plea on DHFL

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The National Company Law Appellate Tribunal has agreed to hear the petition by 63 Moons Technologies challenging some of the provisions of the resolution plan for Dewan Housing Finance Corporation Ltd (DHFL).

63 Moons to challenge NCLT nod to Piramal’s DHFL buy

The NCLAT has refused to stay the resolution plan.

63 Moons holds over ₹200 crore of NCDs of DHFL. It had earlier said the current resolution plan is disappointing for NCD holders.

“Other members of the Committee of Creditors, who comprise mainly of banks, have recourse to personal guarantees of promoters whereas NCD holders do not have any such contractual recourse,” it further said, adding that NCD holders will be left high and dry with haircut of 65 per cent to 75 per cent if in future such recoveries from fraudulent transactions are allowed to pass through to the resolution applicants, instead of the creditors,” it had earlier said.

Wadhawan plans to challenge NCLT nod to Piramal’s resolution plan for DHFL

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IIFL Home Finance files draft shelf prospectus to raise ₹5,000 crore via NCDs

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IIFL Home Finance Ltd (IIFLHFL) has filed a draft shelf prospectus with the bourses to raise ₹5,000 crore through a public issue of non-convertible debentures (NCDs).

The face value of each secured and unsecured NCD will be ₹1,000 each and will be issued in one or more tranches. The company has filed the prospectus with both the BSE and NSE.

The retail-focused and technology-driven housing finance company will use the proceeds for onward lending, financing, repayment of existing borrowings and general corporate purposes.

Edelweiss Financial Services Ltd, ICICI Securities Ltd, Trust Investment Advisors Pvt Ltd and Equirus Capital Pvt Ltd are the lead managers to the issue.

The proposed NCDs are rated AA/Stable by Crisil Ratings Ltd and BWR AA+/Negative (Assigned) by Brickwork Ratings India Pvt Ltd.

IIFLHFL’s main focus is to provide loans to the first-time homebuyers in the economically weaker section and lower-income segments in the suburbs of Tier-I, Tier-II and Tier-III cities.

Salaried and self-employed customers account for 44.37 per cent and 55.63 per cent of its ₹20,693.69 crore assets under management as of March 31, 2021, which has grown at a CAGR of 20.64 per cent over the last five fiscals.

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SBI Card plans to raise Rs 2,000 crore via debt securities, BFSI News, ET BFSI

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SBI Cards and Payment Services Ltd (SBI Card), said it plans to raise up to Rs 2,000 crore through the issuance of Non-convertible debentures.

SBI Card , a payment solutions provider said, “A meeting of the Board of Directors of the Company is scheduled to be held on Friday, March 12, 2021,to consider and approve raising of funds by way of issuance of Non-Convertible Debentures (NCDs), aggregating to Rs 2,000 Crores in one or more tranches over a period of time.”

In January 2021, SBI Cards had informed about its fund raising of Rs 550 crore via NCDs done on a private placement basis. These carry a tenure of three years with a coupon rate of 5.9% per annum. The company also announced it’s appointment of new MD & CEO Rama Mohan Rao Amara post which the fund raising was announced.

SBI Cards reporte a 52% YoY fall in its net profit to Rs 210 crore during the December quarter while its total income stood at Rs 2540 crore during the quarter against Rs 2563 crore in the year-ago period. Further, the capital adequacy ratio was at 23.7% compared to the minimum regulatory requirement of 15%.

The card company also reported NPAs on proforma basis at 4.51% as compared to 7.46% in September quarter. As the Supreme Court had earlier directed lenders to not declare any fresh NPAs after August 31, 2020, and all lenders had disclosed NPAs on proforma basis to reflect the true picture of asset quality.



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Centrum Capital Ltd approves raising of funds up to ₹100 cr through NCDs

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The Fund Raising Committee of Centrum Capital Ltd (CCL) on Friday approved raising of funds up to ₹100 crore through issuance of Non-Convertible Debentures (NCDs).

The issuance of NCDs, which will be secured, redeemable, unlisted, unrated, principal protected market linked, will be in one or more tranches, for cash, at par or premium, in dematerialised form, on private placement basis, CCL said in a regulatory filing. Each NCD will have a face value of ₹1 lakh.

This NCD issuance is part of the in-principle approval accorded by CCL’s board of directors on June 25, 2020, for raising of funds through issuance of NCDs up to ₹1,000 crore in one or more series/ tranches, on private placement basis. Till date CCL has raised ₹196.62 crore via NCDs, the filing said.

Also read: Centrum Microcredit raises $5.55 million from Singapore’s IIX

CCL’s principal business activity is merchant / investment banking services. It is also a holding company, with shareholding in 10 subsidiaries, 4 step-down subsidiaries, an associate company and a joint venture.

As per CCL’s annual report, the company’s material subsidiaries are – Centrum Retail Services, Centrum Financial Services, Centrum Microcredit, Centrum Housing Finance, Centrum Wealth Management, and Centrum Broking.

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How you should evaluate returns from bonds

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Retail investors have flocked to the ₹5,000-crore bond offer from Power Finance Corporation (PFC), prompting an early closure. One hopes they’ve applied with a good understanding of how this bond compares to other fixed-income avenues. The offer did have some attractive options for retail folks. But reports that did the rounds of the mainstream and social media suggested that when it comes to evaluating bond returns, it is quite okay to compare apples not just to oranges, but also to grapes.

Mind the risks

Company officials promoting the PFC bond were eager to explain how it offered better returns than the National Savings Certificates (NSC). This isn’t strictly true. But even if it were, higher rates on the PFC bond, far from making it more attractive, would indicate higher risks to your capital. In the bond market, high interest rates correlate directly to credit risk.

As a key lender to the troubled power sector with gross NPAs of 7.4 per cent in FY20, PFC’s business carries a fair degree of risk. This is mitigated by the Government of India owning 55.9 per cent stake in PFC, lending it a quasi-government status. The PFC bond is a riskier instrument than the NSC because the latter is Central government-backed and doesn’t require you to take on any business risks.

When evaluating an NCD, it is best to see how much of a spread (extra return) it is offering over a risk-free instrument, which is a Central government bond. Today, the market yield on the five-year government bond is 5.3 per cent. At 5.8 per cent, the five-year PFC bond offered a 50-basis point spread over the G-Secs.

At 6.8 per cent, the NSC, which carries lower risks than PFC, offers 150 basis points (bps) over the G-sec, making it a better choice. The average spreads on five-year AAA, AA and A rated bonds over comparable government securities are currently 37 bps, 104 bps and 300 bps, respectively.

Check tenure

Bank fixed deposits tend to be the default option for investors seeking safety. So, many comparisons have been made between the PFC bonds and bank FDs. Most of these are simplistic comparisons of 5- and 10-year PFC bonds (coupons of 5.8 per cent and 7 per cent) with SBI’s 1- to 5-year deposit rates (5-5.4 per cent).

But it is plain wrong to compare rates on a 1-5 year instrument with a 5-10 year instrument. In the fixed-income market, investors are always compensated for longer holding periods with higher rates, given the time value of money and higher business uncertainties that come with lending for the longer term. If you would really like to compare PFC’s bonds with bank FDs, you would be better off looking at similar tenures. PFC’s three-year bond offered 4.8 per cent against the 5.3 per cent on SBI’s three-year FD. Its five-year bond will fetch 5.8 per cent against 5.4 per cent on the SBI FD.

Even then, the decision on the tenure of fixed-income security what you should buy should be based on your view on how interest rates will move in future and not on absolute rates.

If you buy a 10-year bond today and rates move up in the next 2-3 years, you’d risk capital losses if you try to switch to better-rated instruments.

Beware of market risks

Some have compared PFC bonds to debt mutual funds and concluded the latter are better.

Debt mutual funds which invest in high-quality bonds (corporate debt funds and PSU & banking funds) have delivered category returns of over 9 per cent for one year and 8 per cent for three and five years.

But comparing trailing returns of debt funds to the future returns on PFC bonds is akin to zipping on a highway using the rear-view mirror.

Returns on debt funds in the last one, three and five years have been boosted by falling rates triggering bond price gains.

Should rates bottom out or begin to rise, these gains can swiftly turn into losses. To gauge future returns on debt funds, the current yield to maturity (YTM) of their portfolios and their expense ratios are more useful.

Current YTMs of corporate bond funds are in the 4.5-5.5 per cent range with annual expenses at 0.4-1 per cent for regular plans, pointing to returns of 3.5-5.1 per cent from here, without budgeting for rate hikes. PFC bonds, by offering you a predictable 5.8 per cent for five years, are a better bet if you think rates are bottoming out.

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Power Finance NCDs: It’s a good bet for retail investors

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The forthcoming maiden public issue of non-convertible debentures (NCDs) of Power Finance Corporation ( PFC) is a good bet for retail investors, who will now get an alternative investment avenue with better yield and varied tenors, its Chairman & Managing Director, Ravinder Singh Dhillon said on Thursday.

PFC’s first tranche of NCDs with a base issue size of ₹500 crore and greenshoe option of ₹4,500 crore (total ₹5,000 crore) will open on January 15 and close on January 29. It may be recalled that PFC had already filed a shelf prospectus with a limit of up to ₹10,000 crore. As much as 80 per cent of the NCD issue is being allocated for retail and high net worth individual investors.

Addressing a virtual press conference to announce the launch of the NCD issue, Dhillon said this offering stands out as retail investors— who currently have very few attractive investment avenues — can avail interest rates as high as 7.15 per cent ( for 15 year tenor NCD) even during the current low interest rate environment. He highlighted that Interest rates on available options such as fixed deposits or small savings schemes are relatively low in the current market scenario.

“Attractiveness of this public issue is that the offering is from the highest safety rated issuer with a sovereign character and market leader in its segment. This maiden NCD issue is a step towards further diversification of source of funds and intended to tap wider retail taxable bond segment. It will open a new chapter in PFC’s history through further diversification and offer us a significant opportunity”, Dhillon said. PFC is the country’s largest infrastructure financing company dedicated to the power sector.

Parminder Chopra Director (finance), PFC said thatcher NCDs are taxable, secured, and will be listed on Bombay Stock Exchange. “All the banks offering rates from 4.5-6 per cent across tenors (up to ten years). NSCs are offering 5.8 per cent. Considering these rates, the returns offered under PFC are better than other options”, she said.

Each NCD has a face value of ₹ 1,000 each and Tranche I offers options for tenures of 3,5,10 and 15 years. The minimum application is for ten NCDs. The coupon rates range from 4.65 per cent to 7.15 per cent depending on the tenor and the category of investor making the purchase.

Asked if PFC will look to exhaust the entire ₹ 10,000 crore shelf limit this fiscal itself, Dhillon said it would depend on the market appetite and investor response to the Tranche I.

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Muthoot Fincorp launches NCDs to raise ₹200 cr

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Muthoot Fincorp, flagship company of Muthoot Pappachan Group (known as Muthoot Blue), on Friday launched its eighth public issue of secured and unsecured redeemable non-convertible debentures (NCDs) to raise ₹200 crore with an option to retain over subscription up to ₹200 crore, aggregating to ₹400 crore.

The funds raised will primarily be used to augment the working capital and requisite lending, said Thomas John Muthoot, Chairman, Muthoot Pappachan Group, and Managing Director, Muthoot Fincorp.

Board approval

The company has received board approval to raise NCDs through public issue in the aggregate amount of up to ₹1,500 crore. The first tranche of the issue with a face value of ₹1,000 each and minimum ticket size of ₹10,000 (10 NCDs), had opened on September 28, 2020 and closed on October 23, 2020.

Also read: Muthoot Finance to raise ₹1,000 crore through NCDs

“The second tranche of the issue with the face value of ₹1,000 and a minimum ticket size of ₹10,000 (10 NCDs) opens now and is scheduled to close on January 25, with an option of early closure or extension in compliance to SEBI debt regulations,” Thomas John Muthoot said.

Demand for gold, MSME loans

There will be nine options with tenure options of 27 months, 38 months and 60 months for the secured NCDs, and a tenure option of 72 months for the unsecured NCDs, offering returns with interest rates ranging from 8.25 per cent to 9.40 per cent. The issue has received credit rating ‘CRISIL A/Stable’ from Crisil.

“Muthoot Fincorp has a diversified portfolio of products that is responsibly designed to empower our customers for their lifecycle needs. In the prevailing market conditions, especially when Indian economy is restarting, we have been experiencing a spike in demand for gold and MSME loans,” Thomas John Muthoot pointed out.

Working capital needs

“In order to enable nano, micro, and small businesses, our target customers, rebound, the company needs the infusion of more working capital and hence the decision to go for an NCD issue. The first tranche was received well by our investors, and we managed to raise ₹397.14 crore,” he said.

Also read: Muthoot Finance to be added to MSCI India domestic index

Muthoot Fincorp, along with sister companies, has lakhs of customers actively engaged with it on a day-to-day basis. “We are confident about the success of this NCD issue, and hope that this will further fuel growth in the economy and add more value to stakeholders, including our investors,” Thomas John Muthoot added.

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