9.65% InCred Senior Secure Bonds – Jan-2022 – Should you invest?

InCred Senior Secure Bonds – Jan-2022 – Issue Details, Interest, Reasons to invest and Risk FactorsInCred Senior Secure Bonds – Jan-2022 – Issue Details, Interest Rates and Risks

Wint Wealth has launched InCred Senior Secure bonds now. InCred Senior Secure Bonds are expected to open on 24th January, 2022. These bonds offer high interest rates and secured in nature. These bonds have Crisil-A Rating from Crisil Limited. What are Senior Secure Bonds? Should you invest in InCred Senior Secure Bonds Jan-2022 issue? What are the risk factors in these bonds?

Also Read: 10 Best Mutual Funds to invest through SIP in 2022

What are Senior Secure Bonds?

Senior Secure Bonds are those which are backed by a security pool which can be either secured as well as unsecured loans.

The term “senior” in the “senior secured bond” indicates that the bondholders enjoy the senior-most priority to get repaid in case the NBFC defaults.

These are similar to secured NCDs.

InCred Senior Secure Bonds – Jan-2022 – Issue Details

These senior secure bonds are issued by NBFC – InCred Financial Services Limited through Wint Wealth Platform.

These senior secure bonds expected launch date is 24th January, 2022 (tentative).

These secured bonds offer interest rates between 9.25% to 9.65% XIRR.

These bonds are issued in 3 different series for a tenure of 1 year-1 day and 2 years.

Interest is paid every year.

Minimum amount of investment is Rs 10,000. If you wish you apply for more than Rs 2 Lakhs, you need to apply in multiple applications of Rs 2 Lakhs each.

The issue size is Rs 125 Crores with an option to retain over subscription of Rs 25 Crores totaling to Rs 150 Crores.

These bonds are backed by personal loans, student loans, secured school financing loans and MSME Loans worth of 1.2x of the total issue.

The NBFC rating is CRISIL A (Rating watch with implications).

InCred Senior Secure Bonds Jan-22 – Interest rates and tenure

InCred Senior Secure Bonds Jan-2022 - Interest rates and Issue details

How does the payout happens for Series-I – 1 Year Secure Bonds?

InCred Senior Secure Bonds Jan-2022 - Series-1 - Interest and principal repayment schedule

How does the payout happens for Series II – 2 Year Secure Bonds?

InCred Senior Secure Bonds Jan-2022 - Series-II - Interest and principal repayment schedule

How does the payout happens for Series III – 2 Year Secure Bonds (Amortised)?

InCred Senior Secure Bonds Jan-2022 - Series-III - Interest and principal repayment schedule

InCred Financial Services Limited Financials

Investing in bonds of NBFC is high risk. Let us look at the financials of the company.

1) Profits increased from Rs 3.77 Crores in FY19 to Rs 10.23 Crores in FY21.

2) Net NPAs increased from 0.71% in FY19 to 1.93% for the period ending Sep-2021.

Here are the net worth, AUM, PAT, Debt to equity ratio and NPAs.

InCred Senior Secure Bonds Jan-2022 - Networth and financials of Incred financial services limitedWhy to invest in InCred Senior Secure Bonds Jan-2022?

Here are a few reasons to invest.

1) These bonds offer high interest rates up to 9.65% for a 2 year period and 9.25% for 1 year period. Currently bank FDs are offering interest rates between 5% to 6%, hence such bonds attract investors.

2) These bonds are rated by Crisil as A rating.

3) These bonds are senior secure bonds and backed up by various loans at 1.2x of the issue size. These are similar to secured NCDs issued by various NBFCs.

Risk Factors in InCred Senior Secure Bonds Jan-2022

Here are some of the negative factors or risk factors.

1) There is credit risk in these bonds. In case NBFC declares bankruptcy, investors may not be able to recover the invested principal amount. The NBFC default proceedings have lengthy process.

2) The underlying collateral security has 50% unsecured loans where there is risk of loss.

3) This is an illiquid investment option. In case you want to withdraw before maturity, you need to approach Wint Wealth platform and they would check if any wait listing members are there and offer these bonds to them for transfer. In case there are no such buyers, investors need to wait till maturity.

4) These bonds are secured by way of collateral security of underlying loans.  There could be a fraud and the underlying loans may not exist in reality and the company might not be able to pay to bond investors. In such cases, investors might lose money.

How to invest in InCred Jan-22 Senior Secure Bonds?

You need invest in these bonds through Wint Wealth platform. You need to have PAN number, demat account number and UPI ID to initiate the investment in these bonds.

1) Visit Wint Wealth platform and select InCred Jan-22 bonds link

2) Click on Invest now option

3) Select the series and the number of units you want to invest

4) Submit personal details like PAN number, demat account number, mobile number and email etc., Just make sure that PAN number provided is linked to your demat account number.

5) Enter UPI Id details. You might get mandate immediately or within the same day

6) Accept mandate request and your application is successfully submitted.

7) Bonds would be allotted within 4 days from the date of closure. You would get email from BSE once demat units are allocated.

You can login to your demat account and check the units in case of allotment.

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Should you invest in InCred Senior Secure Bonds Jan-2022 issue?

Wint Wealth InCred Jan’22 senior secure bonds offer high interest rates. It offers flexible tenures of 1 or 2 years. Investment in long term bonds of NBFC could be high risk. Since it offers only for short term, these are good for investment.

On the other side, investors should understand various risks in NBFC Bonds. There are credit risks, liquidity risks and fraud risk. Your investment could be at risk.

Investors should understand all these positive and risk factors before investing in such Senior Secure Bonds.

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Suresh KP

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