IIFL Finance Secured NCD Tranche II– Special Incentive to existing investors

Apart from the competitive coupon rates and the yields offered, the issuer, IIFL Finance, has also come up with an incentive scheme.

Sep 27, 2021 08:09 IST India Infoline News Service

The IIFL Finance NCD issue – Tranche 2 opens for subscription on 27th September,2021 and closes for subscription on 18th October(with an option of early closure). Apart from the competitive coupon rates and the yields offered, the issuer, IIFL Finance, has also come up with an incentive scheme. Under this incentive scheme, for persons who are already investors in the equity shares of IIFL Finance or are investors in the previous traches of bonds issued by IIFL Finance or IIFL Home Finance, an additional incentive is there.

Key highlights of the IIFL Finance NCD Special Incentive Scheme

Here are some key points to note.
  1. The incentives will be applicable to shareholders of IIFL Finance, bond holders of previous issues of IIFL Finance and holders of bonds issued by IIFL Home Finance.
  2. This incentive will be offered to the shareholders and bond holders whose names appear on the books of shareholders / bondholders on the deemed allotment date. The record date for the same will be intimated separately.
  3. The Series I, Series III, Series V and Series VI are coupon paying series. In such cases, a bonus of 0.25% p.a.will be added to the coupon. For example, 8.25% p.a. becomes 8.50% p.a. and 8.50% p.a. becomes 8.75% p.a.
  4. The Series II, Series IV and Series VII are deep discounted cumulative series. In such cases, the bonus will be given as enhanced redemption price, that is explained in detail later on.
  5. The incentive scheme is applicable to all the four categories of investors be it individuals, partnerships, institutions or banks and corporates.
  6. The incentive will only be paid on the NCDs allotted in the current issue. NCDs bought in the secondary market will not be eligible for this incentive.
  7. Investors will lose the bonus coupon if they sell, gift or transfer the NCDs before the maturity of the NCD.
Coupon rate and tenure for various series of NCDs

The simplified table below makes a tabular comparison of the 7 different series of NCDs that are available to the investor. All the NCDs will be issued at the face value of Rs1,000.
Tenure of Bond Series Name Interest Paid Coupon Rate(p.a.) Redeemed at Effective Yield (%p.a.)
24-Months Series I Annual 8.25% Rs1,000.00 8.25%
24-Months Series II Cumulative N.A. Rs1,171.80 8.25%
36-Months Series III Annual 8.50% Rs1,000.00 8.49%
36-Months Series IV Cumulative N.A. Rs1,277.60 8.50%
60-Months Series V Monthly 8.42% Rs1,000.00 8.75%
60-Months Series VI Annual 8.75% Rs1,000,00 8.75%
60-Months Series VII Cumulative N.A. Rs1,521.41 8.75%
Data Source: IIFL Finance

The table is self-explicit, so let us go series wise and see how the incentive payment will work in each of the cases.

Incentive Calculations for Series-I NCDs

This series of the secured NCD is an annual coupon paying NCD issue with a tenure of 24 months and a coupon rate of 8.25% p.a.payable annually. The Series-1 NCD will be issued at the face value of Rs1,000 and redeemed at Rs1,000. The table below captures the incentive scheme for this category.
Categories Original Coupon Incentive Actual Coupon Redeemed at
I, II, III and IV 8.25% 0.25% 8.50% Rs1,000

In the above case, the yield to maturity (YTM) will go up from 8.25% p.a. at 8.50% p.a.

Incentive Calculations for Series-II NCDs
This series of the secured NCD is cumulative NCD issue with a tenure of 24 months and deep discounted in nature. The Series-II NCD will be issued at the face value of Rs.1,000 and redeemed at Rs.1,171.80. The table below captures the incentive scheme for this category.
Categories Original Redemption Redemption Incentive Actual Redemption Implied Yield to Maturity (YTM)
I, II, III and IV Rs1,171.80 Rs5.50 Rs.1,177.30 8.50%

In the above case, the yield to maturity (YTM) will go up from 8.25% at 8.50%.
 
Incentive Calculations for Series-III NCDs

This series of the secured NCD is an annual coupon paying NCD issue with a tenure of 36 months and a coupon rate of 8.50% payable annually. The Series-III NCD will be issued at the face value of Rs.1,000 and redeemed at Rs.1,000. The table below captures the incentive scheme for this category.
Categories Original Coupon Incentive Actual Coupon Redeemed at
I, II, III and IV 8.50% 0.25% 8.75% Rs1,000
In the above case, the yield to maturity (YTM) will go up from 8.50% at 8.75%.
Incentive Calculations for Series-IV NCDs
This series of the secured NCD is cumulative NCD issue with a tenure of 36 months and deep discounted in nature. The Series-IV NCD will be issued at the face value of Rs.1,000 and redeemed at Rs.1,277.60. The table below captures the incentive scheme for this category.
Categories Original Redemption Redemption Incentive Actual Redemption Implied Yield to Maturity (YTM)
I, II, III and IV Rs1,277.60 Rs8.85 Rs.1,286.45 8.75%

In the above case, the yield to maturity (YTM) will go up from 8.50% at 8.75%.

Incentive Calculations for Series-V NCDs

This series of the secured NCD is a monthly coupon paying NCD issue with a tenure of 60 months and a coupon rate of 8.42% payable monthly. The Series-V NCD will be issued at the face value of Rs.1,000 and redeemed at Rs.1,000. The table below captures the incentive scheme for this category.
Categories Original Coupon Incentive Actual Coupon Redeemed at
I, II, III and IV 8.42% 0.25% 8.67% Rs1,000

In the above case, the yield to maturity (YTM) will go up from 8.75% at 9.00%.

Incentive Calculations for Series-VI NCDs

This series of the secured NCD is an annual coupon paying NCD issue with a tenure of 60 months and an annual coupon rate of 8.75% payable annually. The Series-VI NCD will be issued at the face value of Rs.1,000 and redeemed at Rs.1,000. The table below captures the incentive scheme for this category.
Categories Original Coupon Incentive Actual Coupon Redeemed at
I, II, III and IV 8.75% 0.25% 9.00% Rs1,000

In the above case, the yield to maturity (YTM) will go up from 8.75% at 9.00%.

Incentive Calculations for Series-VII NCDs

This series of the secured NCD is cumulative NCD issue with a tenure of 60 months and deep discounted in nature. The Series-VII NCD will be issued at the face value of Rs.1,000 and redeemed at Rs.1,521.41. The table below captures the incentive scheme for this category.
Categories Original Redemption Redemption Incentive Actual Redemption Implied Yield to Maturity (YTM)
I, II, III and IV Rs1,521.41 Rs17.59 Rs1,539.00 9.00%

In the above case, the yield to maturity (YTM) will go up from 8.75% at 9.00%.

To know more, visit iifl.com/bonds

IIFL Secured NCD Tranche-II got closed on 8th October, 2021

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