4 reasons why Shriram Transport NCDs are a screaming buy?

Updated: Saturday, July 21, 2012, 11:53 [IST]

Shriram Transport Finance is offering non convertible debentures (NCDs) aggregating Rs 300 crores. The issue opens on July 26 and closes on August 10. Here are a few reasons why you should seriously consider subscribing to these NCDs.

Coupon rate from the NCDs beat bank FD rates
The NCDs have coupon rates of 11.15 per cent for three years and 11.4 per cent for five years. These rates beat bank term deposit rates hands down and are very attractive. In fact, PSU banks are offering a maximum coupon rate of around 9.75% on term deposits.

Interest rates are likely to fall
With interest rates likely to fall, you would be locking in money at higher interest rates for as much as five years.

Good ratings
The NCDs have been rated AA/Stable by Crisil and AA+ by CARE. These ratings indicate a very high safety in timely payment of interest and principal. Of course, investors must remember there is an element of risk despite good ratings and the risk is never zero.

Relatively liquid, if you need money urgently
The NCDs would be listed on the National Stock Exchange and the Bombay Stock Exchange, offering a degree of liquidity. However, one must be cautioned that listed NCDs don't enjoy large volumes, so if you want to sell large quantities you might get stuck.

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