LIC subscribes to Bajaj Finance NCDs worth Rs 5,000 crore
LIC has subscribed to Bajaj Finance non-convertible debentures worth Rs 5,000 crore. The 10-year NCDs carry an 8.15% annual coupon and will support financing activities, loan repayment, capex and working capital.
What happened
LIC subscribed to Bajaj Finance NCDs worth Rs 5,000 crore. Bajaj Finance will use proceeds for financing activities, loan repayment, capital expenditure and
Key facts
- Rs 5,000 crore
- 500,000 NCDs
- Rs 1 lakh face value per NCD
- 8.15% annual coupon
- Aug. 27, 2036 maturity
- Q1FY27 consolidated profit: Rs 5,986 crore, up 27.4% YoY
- LIC Q1 net profit: Rs 13,492 crore, up 23% YoY
Why this matters
The decade-long NCD financing strengthens Bajaj Finance’s balance-sheet capacity for expansion and potential strategic investments without equity dilution, while raising the hurdle for returns on deployed capital.
What to watch
- Quarterly loan-book growth, especially in consumer B2C, SME, vehicle and consumer-durable finance segments.
- Net interest margin, cost of funds and evidence that incremental lending yields exceed the new debt's all-in cost.
- Asset-quality indicators including gross and net NPA, stage-3 assets, write-offs, collection efficiency and credit-cost guidance.
- Management disclosure on use of proceeds between fresh lending, loan repayment, capex and working capital.
- RBI policy-rate moves, system liquidity conditions and NBFC funding-spread changes.
- Consumer demand trends during major festive and electronics purchasing periods, which affect merchant-finance disbursements.
- Any rise in unsecured-loan delinquencies or regulatory tightening that could constrain growth in higher-yield lending categories.
- Deploy proceeds toward higher-yield secured and unsecured retail loans while balancing loan-growth targets against credit-quality thresholds.
- Use part of the funding to refinance upcoming borrowings or extend liability duration, improving asset-liability matching.
- Intensify merchant and dealer partnerships if consumer-durable and EMI financing is prioritized, potentially increasing financed sales at partner retailers.
- Maintain elevated liquidity buffers and diversify institutional funding following the large single-investor placement.
- Monitor lending yields and pricing discipline to ensure incremental assets generate spreads above the 8.15% fixed coupon plus operating and credit costs.