On January 9, non-banking financial company (NBFC) InCred Financial Services made a public offering of its secured non-convertible debentures (NCDs) with an effective yield of up to 10.20%.

The NCD has a par value of Rs 1,000 and a total issuance of Rs 175 crore (base issue), with an option to remain oversubscribed to Rs 175 crore for a total issuance of Rs 350 crore.

InCred Financial Services (formerly KKR India Financial Services) caters to the personal financial needs of lower-middle/middle-class families in India, such as education loans and personal loans.

According to the company, at least 75% of the funds raised through the offering will be used for follow-on loans, financing, and repayment of interest and principal on existing borrowings. The balance will be used for other purposes.

In addition to InCred’s multiple private NCDs or market-linked bond placements, the firm had a public NCD offering in January 2022.

The size of the last NCD issue was Rs 150 crore (base issue of Rs 125 crore with an option to remain oversubscribed up to Rs 25 crore). The rates offered on these NCDs range from 9.25% to 9.65%.

InCred Financial’s latest NCD issue has a coupon rate of 9.45-10% per annum with quarterly and annual interest payment options. The effective rate of return is as high as 10.02% per year.

According to the company, NCD will maintain a security coverage of 1.05 times the outstanding principal and all interest due and payable until maturity through an exclusive first mortgage guarantee on certain identified receivables.

NCDs have been rated A+ by CRISIL Ratings with a stable outlook.

In its rating rationale, CRISIL notes that InCred Financial has a strong capital position backed by a high-pedigree investor base, experienced originators and senior management, and a diversified loan portfolio.

The Rating agency said poor profitability, operating scale, and market position were key weaknesses. It should be noted that InCred Financial’s NCD presents considerable credit risk as it is not rated AAA, the highest possible security rating.

The issue is scheduled to close on January 27, and allocations will be made on a first-come, first-served basis.