JM Financial Credit Solution 9.75% NCD May-June 2018 - Invest or Avoid?


With the falling fixed & recurring deposit interest rates, investors looking for fixed income schemes have a very limited choice. After Dewan Housing Finance, JM Financial Credit Solutions has come up with it's own NCD. This will open for subscription from 28th May. 

JM Financial NCD's offer interest rates upto 9.75% for different investment horizon. The NCD seems more attractive than DHFL, and is surely going to track the attention of many investors looking for fixed income returns at a decent rate. 

What are NCD's?

A Non - Convertible debenture or NCD can be of 2 types : Non Convertible or Convertible.

In a convertible option, the NCD can be converted into equity on maturity. In case of non-convertible option, investors do not have the option of conversion into shares and on maturity the principal amount along with accumulated interest is paid to the holder of the instrument.

These can also be classified as Secured or Unsecured. Secured NCDs are backed up by some assets which can be liquidated for paying off the investors incase something goes wrong. For this reason, the returns on secured NCDs are lower than unsecured NCDs.

JM Financial Credit Solutions is going to offer Secured and redeemable NCDs. The public issue will be open for subscription from 28th May, 2018 to 20th June, 2018.

JM Financial Credit Solutions NCDs Features

NCD Issue opening Date : 28th May, 2018

Issue Closes on : 20th June, 2018.
Interest Rate on NCDs : The ROI ranges from 9.11% to 9.75% depending on category or tenure.
Issue Size : Base Issue size is Rs 300 cr (with an Option to retain over-subscription amount up to Rs 450 cr).
Mode of Issue : Demat
Issue Price : Rs. 1,000 per NCD
Face Value : Rs 1,000 per NCD
Minimum Application Size : Rs 10,000 (10 NCDs) and in multiple of Rs 1,000 thereafter.
Tenure : 38 months to 10 years
Interest Payment Type : Fixed
Listing : The Secured NCDs shall be listed within 12 Working Days from the Issue Closing Date.
Credit Ratings :  The NCDs have been rated [ICRA] AA/Stable by ICRA and IND AA/Stable by India Ratings.
Basis of Allotment : First come First Serve Basis


Eligibility & Allocation Ratio for NCDs?

Following category of investors are allowed to apply for JM Financial NCDs

Category I - Institutional Investors (20%)

Category II - Non Institutional Investors (20%)

Category III - HNI Investors (30%)

Category IV - Retail Investors (30%)

Should you Invest or Avoid?

Still shying away from investing? Read here - From Complicated to Committed - My relationship with Investment

A lot of investors are in dilemma. DHFL has also offered NCDs at interest rates upto 9.10% vs upto JM's 9.75%. So, should you blindly invest in JM NCDs? Lets look at few rating insights.

DHFL carries AAA credit rating, which signifies the highest ability to fulfil financial obligations like interest payment and principal repayment. JM financial's AA rating signifies good financial health and ability to repay financial obligations; AA rated companies are considered a notch lower than AAA rated ones.

At 9.75 interest, the post tax returns for an investor in 5%,20% & 30% tax slab would be 9.26%,7.8% & 6.82% respectively. Clearly this indicates that for individuals who are in first 2 tax slabs see an attractive return - at least higher than many fixed & recurring deposits. For individuals in 30% tab slabs, the return of 6.82% might not be as attractive.

But if you are looking for fixed income returns, you could decide to allocate some funds to this offer. These are secured & AA rated - don't allocate everything, but just a part of your wealth. But, please ensure you calculate post-tax returns & don't get lured by looking at the figure of 9.75%.

Considering yourself too old to invest? Here's some motivation - It's not too late to start investing in 30's

For detailed information regarding the NCD offer - you can visit

No comments:

Powered by Blogger.