LIC subscribes to Bajaj Finance's ₹5,000 crore NCD issue at 8.15%
- Life Insurance Corporation of India subscribed to the entire ₹5,000 crore NCD issue
- Bajaj Finance allotted secured debentures carrying an 8.15% annual coupon rate
- The 10-year instruments mature on August 27, 2036, with annual interest payments
- Security is backed by a first pari-passu charge on book debts and loan receivables
*this image is generated using AI for illustrative purposes only.
Bajaj Finance has completed the allotment of ₹5,000 crore worth of secured non-convertible debentures (NCDs) via private placement. Life Insurance Corporation of India subscribed to the entire issue. The Debenture Allotment Committee approved the issuance on August 27, 2026.
Fundraise details
The company allotted 500,000 secured NCDs, each with a face value of ₹1 lakh. The instruments carry a coupon rate of 8.15% p.a. and have a tenure of 3653 days (approximately 10 years), maturing on August 27, 2036. Interest payments will be made annually, with the first coupon due on August 27, 2027.
The following table summarises the key terms of the issued instrument:
| Parameter | Details |
|---|---|
| Instrument | Secured Redeemable Non-convertible Debentures (NCDs) |
| Allotment amount | ₹5,000 crore |
| Coupon rate | 8.15% p.a. |
| Tenure | 10 years (3653 days) |
| Maturity date | August 27, 2036 |
| Listing venue | Wholesale Debt Market Segment of BSE Limited |
| Security | First pari-passu charge on book debts/loan receivables |
Security and investor rights
The principal amount and interest are secured by a first pari-passu charge on book debts and loan receivables. For original investors in the tranche, the asset cover is maintained at 1.10 times the sum due at all times until redemption. Subsequent investors hold security with an asset cover of 1 times.
Investors in the initial tranche have specific rights linked to credit ratings:
- If the instrument’s rating is downgraded to AA- or below, original investors may increase the interest rate by up to 25 bps for every notch of downgrade.
- If the rating falls to A or below, original investors may recall the outstanding principal along with accrued interest and compensation by providing a 30-day notice.
About the instrument
NCDs are fixed-income debt instruments used by companies to raise capital. The private placement route allows issuers to offer securities to a select group of investors rather than through a public issue. This mechanism is commonly used by large non-banking financial companies to manage liquidity and fund growth.
Historical Stock Returns for Bajaj Finance
| 1 Day | 5 Days | 1 Month | 6 Months | 1 Year | 5 Years |
|---|---|---|---|---|---|
| +0.72% | -2.49% | -6.77% | +15.40% | +1.01% | +36.73% |
How will the 8.15% coupon rate on this 10-year issuance impact Bajaj Finance's overall cost of debt compared to its current average borrowing costs?
What specific growth initiatives or asset expansion plans is Bajaj Finance prioritizing with the ₹5,000 crore raised from this private placement?
Given LIC's exclusive subscription, does this signal a broader trend of sovereign wealth funds increasing their exposure to private NBFC debt instruments?
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