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If you are looking for bond investment opportunities in Nepal, consider Kumari Bank Limited (KBL) 10% KBL Debenture 2090. This is a type of debt instrument that pays a fixed interest rate of 10% per year and has a term of 10 years. In this article, we will explain what a corporate bond is, how to apply for KBL Corporate Bond 2090, and the benefits and risks of investing in it.
What is a debenture?
A debenture is a financial instrument, somewhat like a bond, that companies or banks use to raise money from the public. Unlike buying shares in a company, investing in a debenture doesn't give you any ownership rights or a say in how the company is run. Instead, when you invest in a debenture, you're essentially lending your money to the issuer in exchange for regular interest payments (called "coupon") and the return of your initial investment (known as "face value") when the debenture matures.
Debentures can come in two main varieties: secured and unsecured. A secured debenture is backed by assets or collateral owned by the issuer. If the issuer can't meet its obligations, these assets can be sold to pay back the debenture holders. On the other hand, an unsecured debenture has no specific collateral tied to it. Its value relies on the reputation and creditworthiness of the issuer.
How to apply for the KBL Debenture 2090?
If you're interested in applying for the KBL Debenture 2090, here's what you need to know:
The KBL Debenture 2090 is an unsecured debenture issued by Kumari Bank Limited, a prominent commercial bank in Nepal. They're issuing a total of 5,000,000 debenture units, each with a face value of Rs. 1,000. So, the total issue size is Rs. 5 Arba.
The application window for this debenture is open from the 2nd Kartik to the 12th Kartik, 2080. If the issue isn't fully subscribed, the deadline could be extended to Kartik 16, 2080.
Out of the total units available, 60% (3,000,000 units) are reserved for private placement, and the remaining 2,000,000 units are open for the public issue. Of these public issue units, 5% (100,000 units) are set aside for mutual funds.
Nabil Investment Banking Limited is the manager responsible for handling this debenture issue. Investors can apply for a minimum of 25 units and a maximum of 500,000 units.
To apply for the KBL Debenture 2090, you'll need to complete an application form and submit it along with a copy of your citizenship certificate and a bank voucher to any branch of Kumari Bank Limited or Nabil Investment Banking Limited. Alternatively, you can also apply online through platforms like Mero Share or other online channels.
What are the benefits and risks of investing in the KBL Debenture 2090?
The benefits of investing in the KBL Debenture 2090 are:
The debenture offers a high interest rate of 10% per annum, which is higher than most bank deposits and government bonds in Nepal.
The debenture has a long maturity period of 10 years, which means investors can lock in their returns for a long time and avoid reinvestment risk.
The debenture is tax-free, which means investors do not have to pay any income tax on the interest income they receive from the debenture.
The debenture is liquid, which means investors can buy and sell it in the secondary market through Nepal Stock Exchange (NEPSE) or over-the-counter (OTC) market.
The debenture has a moderate degree of safety regarding the timely servicing of financial obligations, as indicated by its issuer rating of [ICRANP-IR] BBB+ given by ICRA Nepal.
The risks of investing in the KBL Debenture 2090 are:
The debenture is unsecured, which means it is not backed by any assets or collateral of the issuer. If the issuer defaults on its payment obligations, investors may lose their principal and interest amount.
The debenture is subject to market risk, which means its price may fluctuate depending on the demand and supply in the market, as well as changes in interest rates and inflation.
The debenture is subject to credit risk, which means its rating may change depending on the financial performance and outlook of the issuer. A downgrade in rating may affect its price and liquidity in the market.
The debenture is subject to reinvestment risk, which means investors may not be able to reinvest their interest income at the same or higher rate as the coupon rate of the debenture.
