Muthoot FinCorp has opened its ₹500 crore public issue of secured, redeemable non-convertible debentures (NCDs) for subscription, with the window closing on November 5. The issue offers effective yields ranging from 8.89% to 9.25%, segmented across four distinct tenures: 24, 36, 60, and 72 months. Each NCD carries a face value of ₹1,000, with a base size of ₹200 crore and a green shoe option of ₹300 crore, allowing the company to raise up to the full ₹500 crore if demand warrants.
The proceeds are earmarked for onward lending and financing, repayment or prepayment of existing borrowings, and general corporate purposes, as detailed in the company’s issue documents. Credit rating agencies have assigned the security a CRISIL AA/Stable rating and a BWR AA+/Stable rating from Brickwork Ratings India. These ratings reflect an assessment of credit risk but do not guarantee repayment or preclude the possibility of a future downgrade.
The instruments are secured, meaning they are backed by specified security as outlined in the issue documents. Investors must review the nature and terms of that security, along with the applicable risk factors, before committing capital. A secured status does not eliminate the risk of delayed or incomplete recovery in the event of a default.
The NCDs are proposed for listing on the BSE’s debt market segment. However, listing does not guarantee that investors will be able to sell them at a desired price or when they need the money. Investors should compare the offered yields with those of other instruments of comparable tenure and credit risk, while considering their liquidity needs and investment objectives. The final decision should be based on the full tranche prospectus and its corrigendum, rather than the headline yield alone.