Amid the falling interest rate scenario all across the financial system, investors with a surplus may be looking at the best deal to chase, so if you can afford some risk to get a higher return. Here is a deposit that can provide you yield as high as 9.7% on a cumulative basis.
Shriram Transport Finance Company, an NBFC company into vehicle financing and other operations, has opened its NCD issue for a subscription today. The issue will remain open until August 16.
Objective of the NCD issue:
The company through the issue aims at mopping up close to Rs. 1000 crore. And 75% of which will be used for the purpose of onward lending, financing activities and for repayment or prepayment of interest and principal of existing borrowings.
Credit rating of NCDs:
These secured redeemable NCDs of Shriram Transport Finance company have been rated CARE AA+( Stable) by CARE Ratings and CRISIL AA+/Stable by CRISIL and IND AA+; Outlook Stable' by India Ratings and Research
Categories of investors:
It is as per the investor category that the return will vary on the instrument. For the same, the company has segmented investors into 3 categories like Institutional investors as in the pension funds, banks, NIIs such as companies, HNIs who make an investment over Rs. 10 lakh, retail investors with investment up to Rs. 10 lakh.
Tenor and Coupon rate of interest
|Tenure||30 months||42 months||60 months||84 months|
|III (cumulative)||9.5% effective yield||9.60%||9.70%|
Few other important points
1.This NCD comes with no call or put option i.e. no interest reset period i.e. can be redeemed only upon maturity.
2.Senior citizens have been given a benefit of 0.25% higher return which makes the highest return from the instrument for a senior citizen investor to be 9.95% p.a.
So, as the rates are likely to inch further lower in times to come due to low inflation and government's boost to liquidity, it may be a good option but do take note of risk factor and do not solely on the rating premise take the decision of investment as these ratings are time and again revised and can be lowered on any downfall scenario reported for the company.