9.85% ECL Finance Ltd NCD – July 2018 – Should you Invest?
ECL Finance Ltd. has come out with public issue of non-convertible debentures (NCD) offering up to 9.85% interest rate. The issue opens on July 24 and closes on August 16, 2018.
ECL Finance Ltd is a non-banking finance company, focused on offering a broad suite of secured corporate loan products, retail loan products which are customized to suit the needs of the corporate, SMEs and individuals.
ECL Finance NCD – Significant Points:
Offer Period: July 24 to August 16, 2018
Annual Interest Rates for Retail Investors: 9.25% to 9.85% depending on tenure
Price of each bond: Rs 1,000
Minimum Investment: 10 Bonds (Rs 10,000)
Max Investment Limit for Retail Investor: Rs 10 Lakhs
Credit Rating: “CRISIL AA/Stable” and “[ICRA]AA (stable)”
NCD Size: Rs 500 crore with option to retain over-subscription up to Rs 2,000 crore
NRIs are NOT eligible to apply to this NCD issue.
Allotment: First Come First Serve
Listing: Bonds would be listed on BSE and NSE and will entail capital gains tax on exit through secondary market
There are 8 options of investment in ECL Finance NCD.
Series VIII offers floating interest rate benchmarked to MIBOR (Mumbai Inter-Bank Offered Rate). As of July 19, 2018 this was 6.29%. So as of today the interest rate on offer would be 8.79% (6.29% + 2.50%). You can check latest MIBOR rates here.
Company shall allocate and allot Series II NCDs wherein the Applicants have not indicated their choice of the relevant NCD Series.
The bonds can be purchased both in Demat and Physical Form.
ECL Finance NCD – Who can Apply?
This issue is open to all Indian residents, HUFs and Institutions.
The banks have started increasing interest rates on fixed deposits and hence it may not be good idea to invest for long term (DO not go for 10 year tenure – you might get better opportunities going forward).
For people in highest tax bracket Tax free bonds are trading at yields of 6.1% to 6.3% – which would turn out to be better and more secure investment
How to Apply?
If you have Demat account apply through that or ASBA facility provided by banks. It’s the easiest way to apply and also avoids a lot of hassle in terms of KYC and paper work
In case you don’t want to do it online, you can download the application form from Financial Institutions and submit to collection centers.
Recommendation:
My recommendation is to invest some part of your Fixed Income investment in this NCD Issue (3 or 5 year tenure bonds only)
You should always have diversified portfolio be it fixed deposit, NCD or equity investment
Its good idea to remain invested till maturity because liquidity on exchanges is low and hence you would get lower than market value
You can also play rising interest rate by opting for Series VIII which is linked to MIBOR rates.
If you plan to invest in this issue, do it early as most NCD issues are over-subscribed within few days of opening.
No related posts.
Amit
Hi Readers! I am Amit, the mind behind Apnaplan.com
I am MBA from NITIE, Mumbai and BIT from Delhi University.
This blog is my online diary where I write about my tryst with my investment decisions. In the 400+ posts on this blog you will find articles on Personal Financial Planning, Investments, Retirement Planning, Insurance, Loans, Fixed Deposits, Provident Funds, Stock Markets, Gold, Silver, Real Estate Investment, Credit Cards, Credit Score, Taxation, Inheritance Planning and Reviews on various Financial Products.
View Comments
Whether NRI's can invest in NCDs or company deposits through NRE accounts?
Kindly inform whether the return are covered under Rs 50000 exemption for FD for senior citizens