Tata Capital’s NCD Opens On September 10: Should You Invest?

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    Tata Capital's lending arm Tata Capital Financial services is set to launch NCD issue for the first time to raise a total of Rs. 7,500 crore. The base issue size is of Rs. 2,000 crore with an option to retain over-subscription upto Rs. 7,500 crore.

    Tata Capital’s NCD Opens On September 10: Should You Invest?
     

    Issue details: The issue will open for subscription on September 10 and will close on or before September 21.

    Minimum subscription has been decided as Rs. 10,000 and applications can be made in multiples of Rs 1,000. Investors need to subscribe to a minimum of 10 NCDs and in multiples of 1 NCD thereof.

    Eligible participants: Retail investor class, high net worth individuals or HNIs, corporate, institutional buyers. For the retail investor category, 30% of the total issue size stands reserved. And their investor can go as high as Rs. 10 lakhs.

    The allotment to the bond will be made on first-come-first serve basis.

    The proceeds from the issue will be primarily used towards on-lending activities.

    The NCDs will be listed on both the exchanges i.e. the BSE and NSE, rendering the investment liquid.

    Edelweiss Financial Services, A.K. Capital Services and Axis Bank are Lead managers to the issue.

    The secured NCDs by Tata Capital Financial Services have been rated Crisil as CRISIL AAA/Stable and CARE as CARE AAA/Stable.

    Series I II III
    Tenure 3 Years 5 Years 10 Years
    Effective Yield 8.8% 8.9% 9.1%
    Nature of bond
      Secured, CRISIL and CARE rated, listed NCDs Secured, CRISIL and CARE rated, listed NCDs Unsecured and listed NCDs
    Interest payment frequency Annual Annual Annual

    Notably, in the rising interest rate regime, when banks have started to increase interest rate on bank FDs it will not be a good idea to invest in the instrument for long term i.e. 10 years. Plus, unsecured nature of the instrument available for 10 years, makes it a rather riskier bet with just 0.2% higher interest in comparison to other Tata Capital NCDs of lower tenure.

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