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Should You Invest In JM Financial ‘AA' Rated NCD Issue That Opens On May 28?
After the DHFL NCD, 9.7% secured redeemable NCD issue of JM Financial is set to hit for public subscription on May 28, 2018. Now here is a breakdown on the issue taking investor's interest into fore:
1. Issue details: The base size of the issue is Rs. 300 crore with an option to retain another Rs. 400 crore, totaling the issue size to Rs. 750 crore. The face value of NCD is Rs. 1000 each and the issue will close down on June 20.
Investors will be able to sell their holding in the NCD even before the maturity date through the stock exchange trading. The issue is proposed to be listed on the BSE.
2. Issue objective: Upto 25% proceeds garnered through the NCD will be put to corporate use and the rest 75% will be used for onward lending , pre-payment or repayment of loans and other financing activities.
3. Options or structure of the issue: Investors need to put in a minimum of Rs. 10000 for investing in the NCD issue by JM Financial. The issue is available for three tenures 38, 60 and 120 months with six options.
i) For the tenure of 38 months, the NCD issue will offer 9.25% per annum
ii) In another option for the same tenure of 38 months, interest will be offered on a cumulative basis.
iii) For the NCD with a tenure of 60 months the effective yield on a per annum basis will be 9.49%.
iv) For the similar tenure of 60 months, there is also an option to get monthly pay-out with 9.11% return
v) For 10 years term, with interest paid on an annual basis, the return comes to be 9.75%
vi) And for the similar tenure of 10 years, in the monthly pay-out option investors will be able to fetch returns to the tune of 9.34%
Taxation of NCDs: Interest income will have to shown in the return of income like any other interest income in the head income from other sources and as the issue is being offered in dematerialized form there will be no TDS deduction.
So, given the creditworthiness of the new investment option plus an attractive coupon rate investors can put in their bets remembering that you can even exit the investment through the exchange route even before its maturity.
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