The Tenure of the NCDs are two, three and five years. The issue opens today i.e. Sept 29, 2014 and would remain open until Oct 31, 2014, just over two months,
Interest rates offered by SREI Infra Finance NCD
The NCDs offer a maximum yield of 11.75 per cent. The coupon rates vary from 11 to 11.25 per cent. The interest options include cumulative as well as annual dividend.
a) Cumulative options
Under the cumulative option a sum of Rs 1000 becomes Rs 1239 in 2 years. That gives a yield of 11.25 per cent. The returns are pretty decent. Under the three year scheme you get Rs 1387 for a sum of Rs 1000 and Rs 1744 on a 5 year scheme.
b) Non cumulative options
In the non cumulative options the interest rate as mentioned earlier ranges between 11 and 11.75 per cent depending on the interest rate frequency and the time period.
Should you invest?
The NCDs of SREI are secured and have backing against the assets of the company. Secondly, the returns are pretty decent given the fact that one can get an interest rate of around 9 per cent in bank deposits. That makes the deposits attractive.
All said and done these deposits cannot be considered as safe as bank deposits. But, that would be in a very extreme case. One can go for a two year period to get a decent return.