8.05% Mahindra Financial Services NCD – July’17 – Should you Invest?
Mahindra & Mahindra Financial Services Ltd, a leading rural non-banking financial company has come out with public issue of non-convertible debentures (NCD) offering up to 8.05% interest rate. The issue would open on July 10 and would close on July 28, 2017.
M&M Finance NCD – Significant Points:
Offer Period: July 10 to 28, 2017
Annual Interest Rates for Retail Investors: 7.86% to 8.05% 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: ‘IND AAA’ India Ratings and Research and ‘BWR AAA’ by Brickwork
NCD Size: up to Rs. 2,000 Crores
Allotment: First Come First Serve
Listing: Bonds would be listed on BSE and will entail capital gains tax on exit through secondary market
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Why you should not invest?
The NCD is unsecured.
There are NCDs available in secondary market which have higher yields with similar rating. The problem is low liquidity and hence is difficult to buy in large numbers.
The present Tax Free Bonds are offering yields up to 6.5% in secondary market, which is better investment for People in highest tax bracket.
In case you don’t want to do it online, you can download the application form from company site or Financial Institutions and submit to collection centers.
Recommendation:
My recommendation is to invest some part of your Fixed Income investment in this NCD Issue
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 are low and hence you would get lower than market value
Remember the NCD is Unsecured which means it’s not backed by any company asset and in case company shuts down you would be last in queue of lenders to receive money
The 15 year bond (Series III) has CALL option which means company can buy the bond after 10 years. It would in case the prevailing interest at that time is significantly lesser than 8.05%.
If you plan to invest in this issue, do it early as most NCD issues are over-subscribed before the end date.
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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.