L&T Finance NCD issue could offer up to 8.65% returns

Mumbai: Financial planners believe the forthcoming issue of L&T Finance NCD which opens on December 16, could be a good buy for investors especially retirees and those in the low tax bracket. The non-convertible debentures offer interest rates as high as 8.65% to retail investors and come with tenures of 3, 5 and 7 years. As compared to this a fixed deposit from State Bank of India, offers a maximum of 6.25%, thereby giving investors a lucrative spread.

“Investors can earn as much as 235 basis points more than a bank deposit from a AAA issuer, making it an attractive proposition,” says Anup Bhaiya, MD and CEO, Money Honey Financial Services.

These rates also compare favourably over the GOI bonds that pay investors 7.75%. The NCDs come with tenures of 3, 5 and 7 years with option to receive interest monthly and annually. The NCDs have to be held in demat form and though interest income from NCDs is taxable, but there is no tax deduction at source (TDS) and hence distributors believe retirees or those in the lower tax bracket this is an excellent bet.