Regency Fincorp Announces Rs 45 Crore NCD Issuance

13% Annual Coupon | Rs 45 Crore Total Issue Size

Reader Takeaway: The NCD issuance secures capital at 13% interest, though investors must track future asset quality and security cover compliance.

What just happened

Regency Fincorp Limited has formally approved a private placement of secured, rated, and listed Non-Convertible Debentures (NCDs) aggregating to Rs 45 crore. The issuance is divided into a base issue of Rs 15 crore and a green shoe option of Rs 30 crore, consisting of 45,000 debentures with a face value of Rs 10,000 each.

Why this matters

The instrument carries a 13% per annum coupon, payable on a monthly basis. This fundraising move signals the company’s current cost of debt as it seeks to bolster liquidity. The structure includes a penal interest clause of 3% per annum should the company delay interest or principal payments by more than three months.

Security and Structure

The NCDs carry a 36-month tenure with a staggered principal repayment schedule. Investors will receive 25% of the principal at the end of the 24th month, 25% at the end of the 30th month, and the final 50% upon maturity at the 36-month mark. To mitigate risk, the company has pledged a security cover ratio of 1.35x, backed by a mix of secured and unsecured principal loan receivables.

What to track next

Investors should monitor the company's ability to maintain the 1.35x security cover throughout the tenure of the debentures. Furthermore, the effectiveness with which Regency Fincorp deploys these funds to grow its loan book will be critical for long-term balance sheet health.