L&T Finance Calls Back ₹50 Crore Perpetual Bonds; Redemption on March 18, 2026

Mumbai, February 13, 2026:  L&T Finance Limited has announced the exercise of the call option on its Subordinated Perpetual Tier-I Debt issued in March 2016, according to a regulatory filing submitted to BSE and NSE today.

The company will redeem the outstanding ₹50 crore Non-Convertible Debentures (NCDs) on March 18, 2026, along with the final annual coupon payment of 9.50% per annum.

Key Details at a Glance

What This Means

1. Call Option Explained
These perpetual bonds were issued with a call option exercisable after a minimum of 10 years, subject to RBI approval. The company has now exercised that option, meaning it will repay the principal amount to debenture holders on March 18, 2026.

2. Final Payment
On the redemption date, debenture holders will receive:

• Full principal amount outstanding

• Annual coupon at 9.50% for the last year

3. Record Date Fixed
The company has fixed March 2, 2026 as the record date. Only debenture holders listed as on this date will be eligible for the redemption and final coupon payment.

Official Communication

In the letter sent to debenture holders, L&T Finance confirmed that in accordance with the terms of the issue, the company is exercising the call option on March 18, 2026. The company has obtained approval from the Reserve Bank of India via email dated February 12, 2026 for exercising this call option.

The filing was submitted by Apurva Rathod, Company Secretary and Compliance Officer of L&T Finance Limited.

Why This Matters

For Debenture Holders:

• Those holding these perpetual bonds since 2016 will now receive their principal back after nearly 10 years.

• The 9.50% coupon was attractive compared to current market rates, so investors will need to redeploy funds.

• Post-redemption, no further interest will accrue on these instruments.

For L&T Finance:

• Redeeming high-cost perpetual debt at 9.50% allows the company to potentially refinance at lower rates in the current interest rate environment.

• Exercising the call option with RBI approval demonstrates adherence to debt terms and regulatory norms.

• The bond was originally issued by L&T Infrastructure Finance Company, which merged into L&T Finance in 2021. This redemption completes the integration process for this particular instrument.

For Debt Market Observers:
Perpetual bonds are rarely held in perpetuity. Call options are typically exercised when interest rates decline, allowing issuers to refinance more cheaply. The current interest rate environment makes this move strategically sound.

Timeline of Events

Expert Take

According to debt market analysts, exercising the call option on 9.50% perpetual debt makes strategic sense in the current rate cycle. L&T Finance can now replace this high-cost debt with cheaper funding, improving its overall cost of capital. For investors, this marks the end of a high-yielding tenure, requiring them to search for alternative investment options with comparable returns.

Conclusion: Strategic Move by L&T Finance

The redemption of these perpetual bonds marks the end of a nearly 10-year journey for this instrument. For L&T Finance, it represents a financially prudent decision that aligns with its capital management strategy. For investors, it serves as a reminder that perpetual bonds come with call risks — though in this case, they enjoyed a handsome 9.50% coupon locked in for a decade.

Disclaimer: This article is based on publicly available regulatory filings submitted by L&T Finance Limited to BSE and NSE. Investors are advised to consult their financial advisors before making any investment decisions.