A host of non-banking finance companies (NBFCs) have lined up their non-convertible debenture (NCD) issuances in the run up to the financial year end amid liquidity tightness in the banking system and good demand for loans.

NBFCs such as Kosamattam Finance, Muthoot Finance, Edelweiss Financial Services, 360 ONE Prime Limited (formerly known as IIFL Wealth Prime Limited) and Muthoot Fincorp will be collectively raising up to ₹2,750 crore via NCDs this month, per their regulatory filings.

Kosamattam Finance is currently in the market (issue period: January 1, 2024 to January 12, 2024) to raise up to ₹200 crore (base issue size of ₹100 crore with an option to retain oversubscription up to ₹100 crore) via NCDs of 18 to 88 months duration. These NCDs carry a coupon rate ranging from 8.52 per cent to 10.47 per cent, depending on the tenor.

Muthoot Finance too is in the market (issue period: January 8, 2024 to January 19, 2024) to raise up to ₹1,000 crore (base issue size of ₹100 crore with an option to retain oversubscription up to ₹900 crore) via NCDs of 24 to 60 months duration. These NCDs carry a coupon rate ranging from 8.25 per cent to 8.50 per cent, depending on the tenor.

Additional incentive of 0.50 per cent above the coupon rate is applicable to Category II (Non Institutional), Category III (High Net Worth Individuals) and Category IV (Retail Individual) investors, per the company’s filing.

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Edelweiss Financial Services is planning (issue period: January 9, 2024 to January, 22, 2024) to tap the market to raise up to ₹250 crore (base issue size of ₹125 crore with an option to retain oversubscription up to ₹125 crore) via NCDs of 24 to 120 months duration. These NCDs carry a coupon rate ranging from 8.95 per cent to 10.45 per cent, depending on the tenor.

360 ONE Prime Limited (formerly known as IIFL Wealth Prime Limited) is planning (issue period: 11 Jan 2024 to 24 Jan 2024) to raise up to Rs 1000 crore (base issue size of Rs 200 crore with an option to retain oversubscription up to Rs 800 crore) via NCDs of 18 to 60 months duration. These NCDs carry a coupon rate ranging from 8.91 per cent to 9.66 per cent, depending on the tenor.

Muthoot Fincorp is planning (issue period: Jan 12, 2024 to January 25, 2024) to raise up to ₹300 crore (base issue size of ₹ 75 crore with an option to retain oversubscription up to ₹225 crore) via NCDs of 24 to 60 months duration. These NCDs carry a coupon rate ranging from 8.90 per cent to 9.75 per cent, depending on the tenor.

Further, within the overall issue size, the NBFC will allocate Rs 50 crore worth of NCDs of 96 months tenor. Investors will earn an effective yield of 9.05 per cent.

Venkatakrishnan Srinivasan, Founder and Managing Partner of Rockfort Fincap LLP, observed that possible reasons to tap funds through public issue of bonds include transparency and market access, investor diversification, better pricing and smaller lot size providing liquidity and ease of secondary market trading.

However, lower credit rated bond issuers are still finding it difficult to garner large quantum through private placement route.

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