Muthoot Finance's Rs 500-cr bond issue opens on Friday

Gold loan company Muthoot Finance today said its Rs 500-crore bond issue, the third this fiscal, will hit the markets on Friday.

"We have got Sebi permission for a Rs 250 crore NCD (non-convertible debenture) issue which has a green-shoe option," Muthoot Finance Managing Director George Alexander Muthoot said here.

The issue offers four different tenors - two years with a yield on 13 per cent, three years at 13.25 per cent, five years for HNIs and QIBs, with a coupon of 13.25 per cent and five and a half year tenor attracting 13.43 per cent.

In the past two issues, the largest gold loan firm in terms of loan portfolio had offered 13 per cent for two years and 13.25 per cent for the three-five year bonds.

On higher pricing, Chief Financial Officer Oommen K Mammen said going by the indications from RBI, the interest rate has reached its peak and "we want maximum participation from the retail investors and hence the higher coupon".

The issue, priced at Rs 1,000 per bond with a minimum of Rs 5,000 worth of bonds, opens on March 2 and closes on March 17. Muthoot said the funds will be used for operational expenses, apart from part-paying debt.

This is the third NCD issue from the company this fiscal. Earlier, it had raised Rs 693 crore last August and Rs 459 crore in December.

The company has so far raised Rs 10,000 crore worth working capital from as many as 30 banks and mutual funds.

Since the bank lending to gold financing firm has been tightened by the Reserve Bank recently, Muthoot said his cost of fund has gone up to some extent.

In the recent past, the cost of funds has gone by 2.5- 3 per cent to 12.5-13 per cent, while the firm's net interest margin remained at 10.81 per cent at the end of Q3, he said.

Source: Financial Express