Close on the heels of its NCDs in Aug 2014, Muthoot Finance is once again offering NCDs. While in August the maximum one could earn is 11.50 per cent in Oct it is marginally reduced to 11.25 per cent.
1) Issue opens on Nov 19 and closes on dec 18, 2014
2) NCDs are avilable in cumulative and non cumulative options.
3) ICRA has assigned a rating of -AA, which indicates a highe degree of safety.
4) Bonds would be listed on the BSE, enabling investors to buy and sell the same.
Interest Rate on the Muthoot Finance NCD
a) Monthly Income Option
Under the monthly income option the interest rate payable would be 10.75 per cent for NCDs of 24 months, while the NCDs of 36 months attract an interest rate of 11 per cent, while 60 months attract an interest rate of 10.75 per cent.
b) Annual Option
Under the annual option the interest rate payable under 24, 36 and 60 months the interest payable is 11 per cent, 11.25 per cent and 11 per cent respectively.
c) Cumulative Option
An investment of Rs 1000 would fetch a sum of Rs 1,227 in 24 months, while after 26 months one would get a sum of Rs 1368 for Rs 1000 invested. For a period of 60 months one would get a sum of Rs 1685 for every sum of Rs 1000 invested.
4) 400 Day Option
There is also a 400 day option under which a sum of Rs 1000 become a sum of Rs 1113.
Should you subscribe?
The NCDs of Muthoot Finance are rated well by ICRA. They are also secured instruments. Nontheless, in today's date and time nothing can be considered as absolutely secure and every instrument carries a risk. The coupon rates are very attractive as compared to bank interest rates, which probably gives the Muthoot NCDs a slight edge.