Muthoot Capital Services has successfully raised Rs 150 crore through the private placement of senior secured non-convertible debentures (NCDs). The debt instrument, which carries a coupon rate of 9.25% per annum with a 24-month tenure, is secured by a minimum asset coverage ratio of 1.1x. The proceeds will support the company’s operational funding requirements, and the debentures are proposed to be listed on the BSE.
Muthoot Capital Services Allots Rs 150 Crore in Secured NCDs
150 Crore raised via NCDs; 9.25% annual coupon rate fixed for 24-month tenure.
Reader Takeaway: The issuance provides operational liquidity at a fixed cost while maintaining strict 1.1x asset coverage covenants.
What just happened
Muthoot Capital Services Ltd has successfully completed the allotment of 15,000 senior, secured, rated, listed, redeemable non-convertible debentures (NCDs). The issuance, conducted via private placement, has a total size of Rs 150 crore, comprising a base size of Rs 75 crore and a green shoe option of Rs 75 crore. Each NCD carries a face value of Rs 1,00,000.
Why this matters
This capital infusion allows Muthoot Capital to bolster its funding pool at a 9.25% interest rate, payable quarterly. The inclusion of a step-up coupon mechanism—which adjusts the rate by 25 basis points for every notch of rating change—provides a safeguard for investors relative to the company's credit standing. The company is mandated to maintain a 1.1x asset coverage ratio on standard loan receivables, ensuring the security of the debt.
Risks to watch
Investors should monitor the company's asset quality, as the NCDs are secured against loan receivables. Any deterioration in the loan book could pressure the 1.1x coverage requirement. Furthermore, the penalty of an additional 2% interest rate in the event of payment delays highlights the importance of maintaining strict liquidity management.
What to track next
Shareholders should look for upcoming financial filings to assess the company’s debt-to-equity ratio and confirm compliance with the asset coverage covenants established for these debentures.