MUMBAI: Investors could go all out to lock money into the non-convertible debentures of India Grid Trust. With the NCDs offering interest rates of as much as 8.2 per cent, which is way higher than the long-term deposit of any top-rated company, financial planners are advising clients to put up to 10 per cent of their fixed income portfolio into this security.
The ₹1,000-crore NCD issue of India Grid Trust opens on April 28 and closes on May 7. The NCDs rated the highest AAA will be issued on a first come, first served basis.
India Grid Trust, India’s first listed power sector infrastructure
, is owned by Electron IM Pte, an affiliate of private equity fund KKR. Investors could put money in these NCDs under four tenures: three, five, seven or 10 years.
Investors will earn 6.75 per cent annually for the three-year option, 7.6 per cent for the five-year option, 7.9 per cent for the seven-year option and 8.2 per cent for 10 years. For investors opting for the seven- and 10-year maturities, there is an option for quarterly interest payments. Distributors say these NCDs offer better interest rates than fixed deposits of banks. A 10-year fixed deposit of SBI pays 5.4 per cent annually.
“There is an opportunity to lock in at high rates and even earn a capital appreciation in the 7-year and 10-year option, as and when interest rates go down,” said Anup Bhaiya, MD, Money Honey Financial Services.
In the issue, 40 per cent each is reserved for retail and HNIs with the balance 20 per cent for institutional and corporate investors. The minimum application amount is ₹10,000 and investors have to apply in demat form only.
“Stable long-term cash flows from assets, strong financial position, highest rating of AAA and backed by strong promoters like KKR make this an attractive and sound bet for fixed income investors,” says Ajay Manglunia, head (institutional fixed income), JM Financial.
Bhaiya said investors should limit exposure to the NCDs to 5-10 per cent of their debt portfolio.