As interest rates in the economy in all probability are likely to head northwards due to a couple of macro-economic concerns, investors can expect higher return from their deposits some time soon. But much before that there is a good piece of news for debt investors, as upcoming NCDs which are to open for subscription later during the week will provide a higher return between 9.1% to 9.75% return per annum.
NCDs or non-convertible debentures are fixed income products that offer a comparatively higher rate of return to investors and companies float such an issue to raise funds from the public. And as these debentures do not have the option of conversion into equity at maturity referred as NCDs. On maturity of the term of the debt paper, principal amount as well as accumulated interest is paid to the debenture holders.
Forthcoming NCD issues:
1. DHFL NCD issue: On May 22, 2018, Dewan Housing Finance Corporation Limited (DHFL) will opens its pubic issue of NCDs that will close for subscription on June 4, 2018. The initial size of the issue is pegged at Rs. 3,000 crore with a green-shoe option of up to Rs 9,000 crore that makes the total size upto Rs. 12,000 crore.
With a high AAA rating by CARE and Brickwork, the maximum interest rate on offer by the DHFL NCD issue is 9.1% per annum. The debt instrument is available for 3, 5, 7 and 10 years tenure. Senior citizens are eligible for a higher return by 10 basis points.
2. JM Financial NCD issues: JM Financial Credit Solutions is also set to open its Rs. 750 crore NCD issue for public subscription on May 28, 2018. The fixed-income instrument is available for tenures of 38 months, 5 years and 10 years. And for its highest tenure paper, the company is offering a return of 9.75% per annum, notably higher than bank fixed deposits by 2.0-2.75%.
Just like company stocks, you can trade in these NCD issues on the stock exchange and if held in dematerialized form, TDS implications do not arise as and when interest payment on these NCDs is made.