Muthoot Capital Services Raises Rs 200 Crore via NCDs

Muthoot Capital Services Ltd has raised Rs 200 crore via a private placement of non-convertible debentures (NCDs) maturing in October 2029. The issue comprises 2,00,000 debentures issued at a face value of Rs 10,000 each.

Reader Takeaway: The 9.25% coupon provides steady monthly income, while the asset coverage ratio of 1.1x protects principal.

What just happened

Muthoot Capital Services allotted 2,00,000 senior, secured, rated NCDs on October 14, 2026. The issuance forms part of the company's capital-raising strategy to support its ongoing lending and financial operations.

Key Terms of the Issue

The debentures carry an annual coupon of 9.25% paid on a monthly basis. The instrument features a bullet repayment structure, meaning the entire principal amount is due upon maturity after 36 months on October 14, 2029.

Security and Covenants

To safeguard the investment, the debentures are backed by a pari passu charge on the company’s standard loan receivables and current assets. The issuer is contractually obligated to maintain a minimum asset coverage ratio of 1.1 times the outstanding debenture value throughout the life of the instrument.

Interest and Rating Provisions

The NCDs include a dynamic coupon mechanism tied to the company's credit rating, currently rated 'AA-'. If the rating is downgraded, the coupon rate increases by 25 basis points per notch. Conversely, an upgrade from a previous downgrade results in a 25 basis point decrease, though the rate will never fall below the floor of 9.25%. A penalty of 2% per annum applies if the company defaults on payments.

What to track next

Investors should monitor the company's asset quality and any subsequent credit rating updates, as these directly influence the effective interest rate of the debentures.