“There is a marginal difference in ratings for both issuers. JM which pays slightly higher rates could be a better option,” says Anup Bhaiya, MD, Money Honey Financial Services.
Retail investors looking for higher returns from their debt investments can earn as much as 9.75 per cent from public issues of NCDs that come up later this week. On offer are non-convertible debentures (NCDs) from DHFL and JM Financial Credit Solutions which open on the 22nd and 28th of this month, respectively. Though there is some difference in interest rates and tenures of the NCD, the basic difference between the two issuers is of rating. DHFL enjoys an higher AAA rating and hence offers a maximum interest rate of 9.15, while JM Financial which carries a lower AA rating pays interest rate as high as 9.75 per cent. These NCDs offer 200-275 basis points (2-2.75 per cent) more than bank deposits. Investors can purchase or sell them on the stock exchanges, and if taken in demat form, no TDS is deducted on interest paid.
“Higher the rating, lower is the risk. That is why DHFL offers lower interest rates than JM,” explains Rupesh Bhansali, head (distribution), GEPL Capital.
Investors have a choice to opt for monthly, annual or cumulative options in the NCD based on their cash flow requirements. They can also choose from tenures of 3, 5 year and 10 year durations. DHFL also offers floating interest rates based on Overnight MIBOR benchmark rates plus the applicable spread of 2.16 per cent.
“There is a marginal difference in ratings for both issuers. JM which pays slightly higher rates could be a better option,” says Anup Bhaiya, MD, Money Honey Financial Services.
