• Fri. Feb 23rd, 2024

    Suvita Real Estates to Raise ?105 Crore Through Non-Convertible Debentures

    ByJames Forsyth

    Feb 9, 2024
    Suvita Real Estates to Raise ?105 Crore Through Non-Convertible Debentures

    Suvita Real Estates, a subsidiary of the renowned Shapoorji Pallonji Group, has announced plans to raise ?105 crore through a non-convertible debentures (NCD) issue with a tenure of 15 months. The primary objective of this move is to repay the company’s existing debt. However, what sets these NCDs apart is the impressive return they offer, which is nearly two-and-a-half times higher than risk-free rates. Consequently, these bonds are classified as high-yield or junk bonds.

    Unlike conventional bonds, the NCDs introduced by Suvita Real Estates feature step-up pricing. Investors can expect to receive 17.25% interest for the first 12 months, and this rate increases to a generous 20.25% between the 13th and 15th months. To provide an added level of security, Suvita Real Estates also reserves the right to redeem these bonds after the initial 12-month period.

    In the case of default, investors can rest assured as they are entitled to a remarkable 24% return. It is worth noting that the company faced a setback last September when it missed payments to the Blackrock Asia Pacific Credit Opportunities Fund. Therefore, the proceeds from the NCD issue will be directed towards settling this outstanding debt.

    To maximize accessibility, the secured listed bonds will be open for subscription on February 9, with the subscription period ending on the same day. Notably, the Shapoorji Pallonji Group has chosen to remain silent on this matter.

    Suvita Real Estates’ decision to leverage the NCD market opens up opportunities for investors seeking remarkable returns, backed by a reputable real estate company. With a compelling combination of attractive interest rates and the potential for a high-yield investment, these NCDs present an intriguing prospect for risk-tolerant investors in the financial market.

    FAQ Section:

    1. What is Suvita Real Estates planning to do?
    Suvita Real Estates, a subsidiary of the Shapoorji Pallonji Group, plans to raise ?105 crore through a non-convertible debentures (NCD) issue with a tenure of 15 months.

    2. What is the primary objective of this move?
    The primary objective of the NCD issue is to repay the company’s existing debt.

    3. What sets these NCDs apart?
    These NCDs offer an impressive return, nearly two-and-a-half times higher than risk-free rates, classifying them as high-yield or junk bonds.

    4. How does the interest rate change over time for these NCDs?
    Investors can expect to receive 17.25% interest for the first 12 months, and this rate increases to 20.25% between the 13th and 15th months.

    5. What happens if there is a default?
    In the case of default, investors are entitled to a remarkable 24% return.

    6. What is the purpose of the NCD issue?
    The proceeds from the NCD issue will be used to settle the company’s outstanding debt.

    7. When will the bonds be available for subscription?
    The secured listed bonds will be open for subscription on February 9th, with the subscription period ending on the same day.

    Definitions:

    1. Non-convertible debentures (NCDs): These are debt instruments issued by companies to raise funds. Unlike convertible debentures, NCDs cannot be converted into equity shares.

    2. High-yield or junk bonds: These are bonds that offer higher interest rates compared to low-risk investments, but they also come with a higher level of risk.

    3. Default: When a borrower fails to make the required payment of principal or interest on a debt obligation.

    Suggested Related Links:

    1. Suvita Real Estates Official Website
    2. Shapoorji Pallonji Group Official Website
    3. Investopedia: Non-Convertible Debentures (NCDs) Definition and Explanation