IIFL Home Finance NCD open, know from veterans, invest in it or stay away

If you want to earn double from FD by taking a little risk, then from tomorrow i.e. from July 6, another great option is open for you in the market. IIFL Finance’s Unsecured NCD has been opened for subscription in the market. The special thing about this unsecured NCD is that a strong interest of 10 percent is being given in it, but it is necessary to invest at least 75 crores in it.

This NCD will open tomorrow i.e. 6th July and close on 8th July. Under this, NCDs of Rs 100 crore worth Rs 1000 will be issued. There is also an option of oversubscription of Rs 900 crore with this. It will be necessary to invest at least 75 crores in this NCD, which will get 10 percent interest.

75 per cent of the proceeds from this NCD will be used for lending, financing and the remaining 25 per cent will be used to meet the corporate needs of the company. These NCDs are rated AA Stable by CRISIL.

Talking about this NCD, the company’s management told CNBC-Awaaz that the issue size is Rs 1000 crore. The proceeds will be used for Tier-II capital. Talking on the economy, the company management said that we will see a strong recovery from the current level. The areas where there will be unlocking, recovery will come here.

Should investors invest money in this?

Market experts say that investors should keep in mind that there is a certain amount of risk associated with unsecured NCDs. On the other hand, with the secured NCDs, specific assets of the company are attached.

Apart from this, this NCD has been rated AA by CRISIL with a stable outlook. Whereas, Brickwork Ratings India Pvt Ltd has rated it AA+ with a negative outlook. AA is placed in the category of high degree of safety from the point of view of meeting the financial obligations on time. But despite this, this rating is not considered as safe as the AAA-rating is considered.

Mumbai based mutual fund distributor Rishabh Desai Says that they would not recommend investing money in this NCD at this time. He says that CRISIL has rated it AA+ which is not even AAA. That’s why it can be called a low credit product. Further, this issue is an unsecured debenture, ie the security of its assets is not supported. If the company defaults, there is no guarantee that investors will get their money back.

The third concern related to this issue is its duration and tenure. Its maturity period is more than 7 years. If the investor needs all his money during this period, then there may be a liquidity problem.

Experts also say that with NCDs, there is a risk associated with the condition of the economy. The economy of the country is still not fully open that the third type of corona virus has arisen in front of us. The economy of the country is going through a very difficult phase at the moment. Therefore, investors should avoid unnecessary risks.

However, some advisors recommend that money can be invested in such issues under certain conditions. If you look at the interest received, this issue looks attractive. Such investors who have high cash surplus and who have a high risk appetite can invest in this issue.

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