Muthoot Finance to raise Rs 2,000 crore through secured NCDs; shares trade in the red

The company has announced its 23rd series of public issue of secured redeemable non-convertible debentures (NCDs) of the face value of Rs 1,000 each.

Shares of Muthoot Finance declined almost 3 percent in intraday trade even as the company revealed its plans of secured non-convertible debentures (NCDs).

The company, on October 26, announced its 23rd series of public issue of secured redeemable NCDs of the face value of Rs 1,000 each.

In a press release, the company said the issue is with a base issue size of Rs 100 crore with an option to retain oversubscription up to Rs 1,900 crore, aggregating up to a tranche limit of Rs 2,000 crore.

"The issue will open on October 27, 2020, and will close on November 20, 2020, with an option to close on such earlier date or an extended date as may be decided by the board of directors or NCD committee," said the media release.

"The secured NCDs proposed to be issued under this issue have been rated CRISIL AA/Positive by CRISIL and [ICRA] AA (Stable) by ICRA. The rating of the secured NCDs by CRISIL and ICRA indicates a high degree of safety regarding timely servicing of financial obligations," Muthoot Finance said.

Moreover, the NCDs are proposed to be listed on BSE. The allotment will be on a first come first serve basis.

"There are six investment options for secured NCDs with ‘monthly’ or ‘annual’ interest payment frequency or ‘on maturity redemption’ payments with coupon ranging from 7.15 percent per annum to 8 percent per annum," Muthoot Finance said.

George Alexander Muthoot, Managing Director, Muthoot Finance Ltd, said, "In the present scenario of lower interest rates and expectations of interest rates falling further, our issue offers safe long-term investment options with high stable returns to investors."

"The issue will augment the company’s long-term funding requirements thereby supporting the stable growth that our company envisages. We expect the current issue, too, be well received by the market in line with our previous NCD issues as there are limited comparable investment avenues available," he added.

Shares of the company pared losses and traded 0.11 percent down at Rs 1,183 on BSE at 1400 hours.

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