Non-banking financial company 360 One Prime, formerly IIFL Wealth, on Monday said it will raise up to Rs 1,000 crore debt through its maiden public issue of secured, redeemable, Non-Convertible Debentures (NCDs).
Shweta Rajani says: “Today you have arbitrage options which are like debt for you to a certain extent and are taxed at 10%. So that can be managed very well but just getting your asset mix right and your market cap mix right which is relevant for your portfolio and your strategy cannot be done in a multi-asset or a hybrid fund. This is where I would suggest a pure play equity and debt rather than a multi-asset.”
Based on what the experts have told us, we have put together 10 smart money moves that can safeguard your finances and help you grow wealthier in the new year. We hope you will find these useful. Wishing you good health, prosperity and safety in 2024.
Vijai Mantri says: “People do not understand the difference between coupon rate and compound rate. So I will just take a very simple illustration. I was part of the HDFC Mutual Fund team when we launched HDFC liquid fund in October 2020. In October 2000, that fund completed 23 years. In a 23-year period the fund generated 6.9% CAGR. If I convert them into simple rates of interest, it is close to 15% per annum.”
Coalitions of banks, insurers and asset managers are in discussions to put some guardrails around what constitutes transition finance.
India is on a path of fiscal consolidation, and the general government debt is expected to substantially decline in the medium to long term, according to the finance ministry. It responded to the International Monetary Fund's (IMF) staff report, stating that the general government debt could be 100% of GDP by FY28, clarifying that this was a worst-case scenario and not a fait accompli.
"They (the AMC Repo) have waived the transaction charges for three months starting from December 11 for tri-party repos in corporate debt securities and there is a plan to increase the size of orders from ₹50 crore at present to ₹200 crore going ahead," a source aware of the developments said.
According to the IBBI data, 67% of the insolvency cases where the resolution process was ongoing until September 2023 have exceeded the 270-day time frame. Resolutions in another 13% of the cases went beyond 180 days but were still under 270 days. Earlier this month, the government told banks that their top executives should monitor large-value cases of bank fraud more closely and that bona fide credit decisions should be shielded from investigations.
The Worli-based project started in 2007 and touted to be the most ambitious real estate project in the country, has faced numerous challenges over the last 10 years. Legal disputes and hurdles had cast a shadow over the 320-meter-high, 88-storey, tower, delaying its progress and raising concerns among investors and stakeholders.
This is the second big investment by BII, the UK's development finance institution and impact investor, in India in quick succession. It has recently committed to lend Rs 250 crore to non-bank lender Aye Finance. “The housing crisis in India has been exacerbated by urbanization and migration. In cities, many low-income families face challenges due to informal job natures and poor living conditions," said Gaurav Malhotra, Director for Financial Services at BII.
As part of the plan, Vedanta Resources is to pledge 13% of its stake in Vedanta Ltd (VDL) to secure a $1.25 billion financing package from a group of lenders led by Standard Chartered Bank and New York-based Cerberus Capital Management to help avert a default on $1 billion of bonds that are due in January, according to people familiar with the matter.
IIFL’s financial claim amounts to more than Rs 185 crore including principal amount and interest thereon as of August 2020. The developer had also agreed and acknowledged debt of more than Rs 148 crore as of August 2019. Following Satra Properties’ default on both the loan facilities, IIFL Finance had moved the tribunal in 2019, after which the developer and the lender entered into consent terms in September 2019.
Fund mobilisation through corporate bonds that are privately placed has hit a record ₹8.97 lakh crore in 2023, with three weeks left in the year. Fund managers attribute the unprecedented mobilisation to the heightened demand for credit driven by increased economic activity amid faster-than-expected growth, coupled with the low cost of funding.
Adani Green Energy Ltd., part of billionaire Gautam Adani’s empire, will redeem the notes in full by its Sept. 8 due date, it said in a filing to Singapore’s stock exchange. The bond’s underwriters will provide a funding letter for $675 million and the company will use equity transaction proceeds to build up the repayment sum, it added.
LIC subscribed to a lion's share of Reliance's ₹20,000-crore bond sale last month, while also taking up a major portion of a bond sale earlier this week by Tata Capital Financial Services (TCFSL), a subsidiary of Tata Capital, sources aware of the developments told ET. LIC had bought ₹13,000 crore of RIL's bonds, the sources said.
The ADB approved a financing package for Pakistan under three different loans. Among other components, these include USD 300 million for improving domestic resource mobilisation; USD 275 million for rehabilitating schools damaged by the devastating August 2022 floods; and USD 80 million for enhancing agricultural productivity to improve food security, according to an announcement by the ADB on Wednesday.
"Increase in these overseas issuances is driven by offshore investors seeking INR fixed income and foreign exchange exposure as a proxy to buying G-secs (government securities) via the FPI (foreign portfolio investment) route, without having to contend with local operational and taxation related aspects," said Siddharth Bachhawat, head-markets at Barclays India.
While companies give bonds to fund operations and large-scale projects, governments use them to finance spending and repay debts.
IIFL Finance, which holds 99% in the microfinance lender, has decided to infuse Rs 200 crore by way of rights issue of 7.5 crore fully paid up equity shares of face value of Rs 10 each at a premium of Rs 16.74 per share. It acquired Samasta in 2017. In the first half of FY24, the NBFC-MFI raised Rs 5,239 crore of debt with about 60% as term loans and another 20% from privately placed bonds.
At a UN Security Council debate, India cautioned against unsustainable financing leading to debt traps, stressing it hinders peace and development. Emphasizing reforms in financial institutions, India reiterated commitment to Agenda 2030 for Sustainable Development. Urging global cooperation, the diplomat highlighted the necessity of inclusive representation for the Global South.
The domestic benchmark bond yield hit a near four-month high of 7.26% in August, tracking a rise in U.S. Treasuries, but eased as the month progressed.
The biggest beneficiary of HDFC's exit, which used to corner more than half of the market funds, is likely to be LIC Housing Finance - the largest AAA pure-play home financier currently.
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Now, let's dissect the key concepts and terms from the article:
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360 One Prime's Debt Sale:
- Non-banking financial company 360 One Prime, formerly known as IIFL Wealth, plans to raise Rs 1,000 crore through a maiden public issue of secured, redeemable, Non-Convertible Debentures (NCDs). This move involves the issuance of debt securities to raise capital.
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Equity and Debt Mutual Funds vs. Hybrid Funds:
- Shweta Rajani suggests that pure play equity and debt mutual funds may be more advantageous than multi-asset or hybrid funds. She emphasizes the importance of managing asset mix and market cap mix for an effective portfolio strategy.
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Smart Money Moves in 2024:
- An article outlines 10 smart money moves based on expert advice to safeguard finances and promote wealth growth in 2024. The specifics of these moves are not provided in the snippet.
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Debt Instruments vs. FDs for Investment:
- Vijai Mantri highlights the difference between coupon rate and compound rate when discussing debt instruments. He uses the example of HDFC liquid fund, indicating a 6.9% CAGR over 23 years, emphasizing the potential benefits of debt instruments over fixed deposits (FDs).
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Transition Finance in 2024:
- Coalitions of banks, insurers, and asset managers are discussing "Transition Finance," aiming to establish guidelines for what constitutes transition finance.
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Fiscal Consolidation in India:
- The finance ministry states that India is on a path of fiscal consolidation, expecting a substantial decline in general government debt in the medium to long term. This statement is in response to the International Monetary Fund's staff report.
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Boosting Corporate Bond Market:
- AMC Repo waives transaction charges for three months in tri-party repos for corporate debt securities. There is a plan to increase the size of orders from ₹50 crore to ₹200 crore.
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IBC Resolution Delays:
- The Ministry of Finance plans to meet Public Sector Bank (PSB) chiefs over delays in the resolution process under the Insolvency and Bankruptcy Code (IBC). Data shows that a significant percentage of ongoing insolvency cases have exceeded the stipulated time frame.
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Supreme Court Upholds E-Auction of Palais Royale:
- The Supreme Court upholds the e-auction of Palais Royale, India's tallest tower, resolving legal disputes and paving the way for its completion.
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Sitara Secures Rs 120 Crore for Loan Book Growth:
- Housing financer Sitara secures Rs 120 crore for loan book growth, addressing challenges faced by low-income families in cities due to urbanization and migration.
These concepts cover a broad spectrum of financial topics, including debt issuance, mutual funds, investment strategies, fiscal policy, corporate bonds, insolvency resolution, real estate, and international financial developments. If you have specific questions or need more in-depth information on any of these topics, feel free to ask.
