NCDs of these companies will fetch you higher yields

Offers for non-convertible debentures (NCDs) of three companies— L&T Finance, Magma Fincorp and Muthoot Homefin— are slated to open on Monday. Another NCD issue from Shriram City Union Finance opened last week. With attractive interest rates on offer, investors can lock into higher yields now.

With broader interest rates softening, any future NCD issues are likely to offer a lower coupon rate.



What's on offer

Magma Fincorp is offering a coupon rate of 10.25% and 10.5% for 3- and 5-year tenure, respectively. Muthoot Homefin will give 9.5% and 10% respectively for 24 months and 60 months. Meanwhile, L&T Finance is offering bonds maturing in 3, 5 and 8 years with a coupon of 8.66-9.05%. Shriram City Union Finance is offering 2, 3 and 5-year NCDs with coupon between 9.55-9.75%. All offer monthly and annual interest payout options as well as a cumulative payout option. The minimum application amount is Rs 10,000. Thereafter, investors can invest in multiples of Rs 1,000.

Investors should ascertain the credit profile of the company issuing the NCDs. AAA rating signifies highest level of safety with minimum risk of default but these fetch lower coupon rate. However, investors should not rely on the credit rating alone, and check previous history of repayment.