9.60% SREI Equipment Finance NCD – April/May’18 – Should you Invest?
SREI Equipment Finance has come out with public issue of non-convertible debentures (NCD) offering up to 9.60% interest rate. The issue opens on April 25 and closes on May 16, 2018.
SREI Equipment Finance is joint venture of SREI and BNP Paribas and deals with financing of Infrastructure equipment in organized sector.
SREI Equipment Finance NCD – Significant Points:
Offer Period: April 25 to May 16, 2018
Annual Interest Rates for Retail Investors: 8.50% to 9.60% 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: “BWR AA+” (BWR Double A Plus) (Outlook: Stable) and “SMERA AA+/Stable’ (SMERA Double A plus/Stable)”
NCD Size: Rs 500 crore with option to retain over-subscription upto Rs 1000 crore
Allotment: First Come First Serve
Listing: Bonds would be listed on BSE and will entail capital gains tax on exit through secondary market
This issue is open to all Indian residents, HUFs and Institutions.
Category I – Institutional Investors – 20% of the issue is reserved
Category II – Non-Institutional Investors, Corporates – 20% of the issue is reserved
Category III – Retail Individual Investors including HUFs – 60% of the issue is reserved
Only Category III Investors can apply for allotment of NCDs in the physical form for Series IV, Series VII and Series X NCDs. However, Series I, Series II, Series III, Series V, Series VI, Series VIII, Series IX and Series XI NCDs would be allotted compulsorily in dematerialized form to all categories of Investors.
The interest rates trend is rising. In last two months SBI has raised its interest rate on fixed deposit by 0.75%. It seems like the interest rates would go up more in near future. Hence should not lock your investment for long term.
The profits of the company declined as compared to the previous year
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.
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
If you plan to invest in this issue, do it early as most good 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.