Hello,
Can I pledge Bonds issued by Wint Wealth?? if so, they will be considered as Cash equivalent like Liquid bees/Liquid funds??
No, this feature is not yet activated.
@Venkat_K Considering that Zerodha doesnât allow conservative short term debt funds under cash collateral (only allow as equity collateral), I donât think they will allow wint wealth bonds under cash collateral even if and when itâs accepted as collateral.
I dont think clearing corp will allow these rather risky bonds.
How clearing corporation is considering them?
Clearing corporation decide what to allow and and what not to pledge, if they allow then brokers can pass that facility to clients. As of now CC wonât allow to pledge.
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Isnât it surprising that most secured instruments are not accepted as collateral
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This shows the faith in their own financial services universe. Treading with trepidation and fully knowing that there is no such thing as âguaranteeâ, outside of marked to market collateral or the sagacious smile of the Rupee
In reference to present offering by Wint Wealth (WW) - " Wint Wheels-Mar21" which has yield of 10.25%.
I have couple of doubts -
First - how can a covered bond offers such a high yield in present low interest rate scenario? As per WW this is a AA rated bond by CARE rating. If you see yield of AA rated bonds on Goldenpi - max yield 10.3% (just 1 bond giving more than 10% and average of approx 7%). None of the bond on Goldenpi is covered bond. So, how can covered bond offers higher yield than non-covered bond?
Second - This bond actually yields 10.8% (as per cbonds.com). So, is WW talking 55 bps as commission or they are actually charging this 55 bps in return of converting it into a covered bonds or some other service?
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Yes, over and above its around 2% which wintwealth earn and they claim that they have 4cr out of 20 cr as liquid cash reserve. so only 80% of the money is invested rest is liquid , so NBFC must be paying atleast 13% p.a . Vehicle loans market rate is max 10-11%. The numbers doesnât make sense
Hi Sachin,
We have good coverage amongst the NBFCs/ financial institutions and keep on looking out for assets where risk adjusted returns are favourable for our investors. Additionally, NBFCs are also willing to give some premium in pricing to Wint Wealth since they are able to further diversify their lender profile via our platform. For most of the entities the existing funders are institutional (banks, mutual funds, foreign investors) and hence are wiling to pay some premium in the interest of diversification.
On your second point, yes we do charge a commission (spread) for structuring/underwriting the deal and making it available to our investors.
Please let us know if we can help with any incremental query.
Stay safe!
Regards,
Anshul
Hi Amresh,
The 4 Cr reserve we have created out of our own resources (NBFC is not bearing the cost for that). This reserve is there to provide liquidity for initial transactions. Gradually as the number of investors increase on our platform we hope some secondary market would also develop and the need for liquidity reserve may not be there in future transactions.
The underlying loans in the covered bond are âusedâ vehicles and interest rates are normally 15% plus.
Regards,
Anshul
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Thanks for the insights!
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