IndiGrid NCD issue opens; chance to lock-in 8.2% yield on ‘safest’ paper

NEW DELHI: The public issue of non-convertible debt (NCD) securities by IndiaGrid, an infrastructure investment trust that owns a number of assets in the power sector, opened for subscription on Wednesday. The NCD promises up to 8.2 per cent interest per annum, a considerably high yield on a paper with highest rating in a low interest rate environment. This issue has been rated ‘AAA/Stable’ by Crisil and ‘AAA/Stable’ by India Ratings.

The securities will be allocated on a first come-first served basis. QIBs and NIIs will be allocated 10 per cent each of the total issue size and HNIs and retail investors will be allocated 40 per cent each.

“There is an opportunity to lock in deposits at high rates and even earn a capital appreciation in the seven-year and 10-year options, as and when interest rates go down,” said Anup Bhaiya, MD, Money Honey Financial Services.

Some analysts say one can allocate 10 per cent of the debt portfolio in this NCD. To subscribe to the issue, the process is similar to that of IPO. The issue will close on May 5. The base size is Rs 100 crore with the greenshoe option of Rs 900 crore. In total, IndiGrid plans to issue 10,000,000 NCDs of face value of Rs 1,000 each. The coupon rate or yield on the issue for HNIs and retail investors will be 6.75 per cent for 3 years tenure, 7.6 per cent for 5 years, 7.9 per cent for 7 years and 8.2 per cent for 10 years.

“The above NCDs would be listed on the stock exchanges and, hence, depending on the demand the price per NCD may fluctuate in the secondary market. However, if you hold these NCDs till maturity, the redemption value would be Rs 1,000 per NCD for Series I,II,III,IV, V, VI irrespective of the price fluctuation in the secondary market,” said ICICI Securities.

IndiGrid is India’s first listed power sector infrastructure investment trust (InvIT), sponsored by KKR and Sterlite Power. IndiGrid was established on October 21, 2016.

IndiGrid was established to own and operate power transmission and renewable energy assets in India. It own 13 operating projects, consisting of 38 EHV overhead power transmission lines, comprising seven 765 kV transmission lines, twenty-nine 400 kV transmission lines and two132 kV transmission lines, with a total circuit length of approximately 7,570 ckms and eleven substations with approximately 13,550 MVA of transformation capacity.

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