Risk-averse investors should avoid NCDs

Instead, they should look at India Post long-term deposits or debt funds as they have lower risk

Tinesh Bhasin  |  Mumbai 

Retail investors seem to be buying non-convertible debentures (NCDs) aggressively. Recently, Muthoot Finance came up with an NCD issue of Rs 2,000 crore, which offered interest rate between 8.25 per cent and nine per cent. The company had planned to keep it open for a month but it was subscribed in a few days. Muthoot had kept 60 per cent of the issue for retail and high net worth individuals. “After the success of the Muthoot Finance issue, more companies are in line to offer NCDs,” says Ajay Manglunia, executive vice-president and head of fixed income at Edelweiss ...

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Risk-averse investors should avoid NCDs

Instead, they should look at India Post long-term deposits or debt funds as they have lower risk

Retail investors seem to be buying non-convertible debentures (NCDs) aggressively. Recently, Muthoot Finance came up with an NCD issue of Rs 2,000 crore, which offered interest rate between 8.25 per cent and 9 per cent. The company had planned to keep it open for a month, but it was subscribed in a few days. Muthoot had kept 60 per cent of the issue for retail and high networth individuals."After the success of Muthoot Finance issue, more companies are in line to offer NCDs," says Ajay Manglunia, executive vice president and head of fixed income at Edelweiss Capital. Depending on the credit rating of the company, the interest rates are expected to be in the same range as Muthoot Finance. "The liquidity in the banking system and slower credit offtake would keep interest rates steady in the near future," says Manglunia.Unless investors understand the nuances of the business of the company offering NCD and the risks involved; they are better off investing in a fixed deposit or debt ... Retail investors seem to be buying non-convertible debentures (NCDs) aggressively. Recently, Muthoot Finance came up with an NCD issue of Rs 2,000 crore, which offered interest rate between 8.25 per cent and nine per cent. The company had planned to keep it open for a month but it was subscribed in a few days. Muthoot had kept 60 per cent of the issue for retail and high net worth individuals. “After the success of the Muthoot Finance issue, more companies are in line to offer NCDs,” says Ajay Manglunia, executive vice-president and head of fixed income at Edelweiss ... image
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