The Rs 1,000 crore NCD issue with a base size of Rs 100 crore and greenshoe of Rs 900 crore got an overwhelming response from investors with collections of nearly Rs 2,400 crore. Retail investors bid almost 80% of the total subscription due to lower returns in traditional investment options like fixed deposits. The NCDs, rated the highest AAA, will be issued on a first come, first served basis.
About 70% of the collections was in the 10-year segment, thereby firmly establishing the NCD as an attractive long-term investment option. The institutional and corporate segments were also fully subscribed in spite of lower coupons, a healthy testimony towards the credentials and credit quality of the issuer, according to bankers.
Ajay Manglunia, head of fixed income at JM Financial, said the success of the issue in the light of logistical challenges surrounding second wave of Covid and otherwise lacklustre debt markets in long term tenor issuances firmly establishes public issues as a viable alternative towards fund raising for highly rated good quality issuers.
“Due to major oversubscription across categories, a lot of investors were not able to get allocation or got partial allocation. Listing on BSE and NSE will give investors an opportunity to transact in the secondary market, where the NCDs are likely to be traded well,” he said.
Investors will earn 6.75% annually for the three-year option, 7.6% for the five-year option, 7.9% for the seven-year option and 8.2% 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% annually.
India’s first power sector InvIT, India Grid Trust, launched its maiden public issue of NCDs on 28 April. Backed by global investors like KKR and GIC, IndiGrid owns Rs 20,000 crore worth of assets in 13 power transmission assets located across 17 states and 1 union territory in India.