Should you invest in Tata PERPETUAL BOND?

Bonds 16 December 2020 12:17:AM


Tata motors coming up with private placement with a coupon of 9.60%

Perpetual bonds do not have a specified date of maturity. The issuers can buy back the bonds after a certain period, and it is generally five years or 10 years. Like other bonds, these bonds are also listed on the stock exchanges and provide exit opportunities to the Investors. Nowadays, Perpetual Bonds are making some noise in the market for all the right reasons. Investors are now pulling out their investments made in bank fixed deposits (FDs) and putting it into perpetual bonds. Also, the rate cuts made by the Reserve Bank of India (RBI) since 2019 and aggravating COVID-19 impact has made FDs lose their shine. Tata Motors Finance Limited has issued recently the three tranches of the Perpetual Bonds starting with 10.25% in September to 9.75% in the last issue and currently up for a deal at a rate of 9.60% and in all the tranches the issuer has raised the amount successfully one because of the Brand Name and second the terms of the issue. The issuer also promising to pay additional 100 bps to the base coupon if the call date is not exercised means the coupon will be revised to 10.60% from 9.60% at the end of the 10 years from the allotment date. 

Investment Alert:

Opportunity to Invest in the Fixed Income Market. Private Placement of Tata Motors Finance Ltd.

Summary & Snap Shot of the Issue.

  • Issue Size :  25cr + 75cr
  • Type:   Unsecured, Listed, Rated, Redeemable, Subordinate Perpetual NCD 
  • Face Value of Bond:  Rs.10 Lacs
  • Coupon: 9.60% payable annually
  • Allotment Date: 21st December 2020
  • Rating: A by ICRA
  • Call Date: 10 years from the date of allotment i,e. December 21, 2030
  • Interest Payment Date: December 21 - Annually
  • Inform latest by- 17th December

Settlement Process: 

  1. Deal Date - December 23, 2020 
  2. Minimum Buying Rs.10 Lacs (1 Bond) & in multiple of 1 bond.
  3. Settlement Amount - At Par + 2 Day`s Accrued Interest (Rs. 527.03)

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