Aye Finance Ltd Approves Up To $15 Million NCD Issue

Aye Finance Ltd will issue senior, secured, rated, listed, redeemable, non-convertible debentures (NCDs) up to USD 15 million.

Reader Takeaway: Company accesses debt market for capital; investors get secured NCDs with defined repayment.

What just happened

The board of Aye Finance Ltd has approved the issuance of NCDs with a total issue size of up to the equivalent of USD 15 million. These instruments are senior, secured, rated, listed, redeemable, and non-convertible debentures (NCDs) with a face value of INR 1,00,000 each.

Why this matters

This move signifies Aye Finance's strategy to raise long-term debt capital to fund its operations and growth. For investors, it offers an opportunity to invest in secured debt instruments with a defined tenure and listing on a regulated exchange.

The backstory

Aye Finance is a non-banking financial company (NBFC) that focuses on providing loans to micro and small enterprises. Accessing debt markets through NCDs is a common method for NBFCs to raise funds.

What changes now

The company will proceed with the private placement of these NCDs. The debentures will have a tenure of 5 years, with the repayment period commencing 1.5 years from the allotment date of June 25, 2026. The maturity date is set for June 25, 2031.

Risks to watch

While the debentures are secured and carry a 1.1x security cover, investors should monitor Aye Finance's ability to service the debt, including semi-annual interest payments and the staggered principal redemption starting in 1.5 years.

Peer comparison

Many NBFCs in India regularly tap the debt markets by issuing NCDs to fund their lending activities. The terms and interest rates typically vary based on the company's credit rating, market conditions, and the specific security offered.

Context metrics (time-bound)

The NCDs are set to be allotted on June 25, 2026, with maturity on June 25, 2031. Principal repayment begins 1.5 years post-allotment.

What to track next

Investors should track the coupon rate offered on these NCDs and Aye Finance's financial performance and credit rating updates.