IIFL Home Finance's latest unsecured NCD issue is a good opportunity for retail investors to lock into high returns, Nirmal Jain, Founder and Chairman of IIFL Group said on Tuesday.
The housing finance arm of IIFL Group is currently in the market with a ₹1,000 crore public issue of unsecured NCD ( base issue size ₹100 crore and option to retain oversubscription of ₹ 900 crore) that offers a return as high as ten per cent (annual interest option) on an NCD (face value ₹1,000) with tenure of 87 months.
The NCD has been rated Crisil AA/stable by Crisil Ratings and BWR AA+/Negative (Assigned) by Brickwork Ratings India Private Ltd. IIFL Home Finance is a wholly owned subsidiary of IIFL Finance.
“Very rarely will investors get low risk and high returns combined together in a public issue. This is a win-win situation for investors and the company", Jain said at a virtual press conference on Tuesday to announce the details of the offering.
While retail investors can benefit from higher returns, the company also benefits in terms of Tier-II capital and thereby enable it to grow, he said.
The latest NCD offering , which will be listed on BSE and NSE, opened on Tuesday and closes on July 28.
Although the NCDs are unsecured, Jain believed that they were no different from secured bonds. Even rating agencies don't see any difference when it came to assessing credit risk for secured and unsecured products, he added. “At the end of the day, the risk that investors take is on the entire company (conglomerate),” he said.
The last time IIFL Home Finance came with an unsecured bond issue was in 2013. That time also the company had offered interest rate higher than prevailing (bank) rates, Jain noted.