Indiabulls Housing Finance issues NCDs, offers 10.75% interest. Should you invest?

livemint.com:

Indiabulls Housing Finance has issued the public issue of secured redeemable non-convertible debentures (NCDs). The coupon rate for these securities is up to 10.75 percent per annum. This is Tranche VI and the minimum amount for which one can invest is ₹10,000.

We give a lowdown on these instruments in case you are willing to invest. 

These are fixed-income instruments, issued by companies in the form of a public issue to garner long-term capital appreciation. They offer better rates of interest as compared to convertible debentures.

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Investors can choose different tenures of investment which could be 24 months, 36 months, 60 months, 84 months and 120 months. Allotment can be made on a first come first serve basis.

Different tenures of investment include monthly, annual and cumulative. 

Credit rating of these instruments is AA/Stable by Crisil and ICRA. Crisil Ratings’ website says the issuers with AA rating are considered to have a high degree of safety regarding timely servicing of debt obligations. Debt exposures to such issuers carry very low credit risk.

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The company has made a public issue of ₹100 crore with a green shoe option of ₹100 aggregating up to ₹200 crore being offered by way of this Tranche VI Prospectus. The issue opened on May 13 and will close on May 27.

Although corporate debt instruments offer higher interest rates to investors, they are generally riskier when compared to the safer instruments such as bank fixed deposits (FDs).     

Therefore, it is generally recommended to stick to AAA-rated instruments. 

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