Coffee Can Investing: the low risk road to stupendous wealth

by Saurabh Mukherjea

investor was assured of his compounded annualized return. This made NCDs extremely popular among investors and led to massive issuances from developers (see the exhibits below).

The party continued for a few years, but it was soon clear that debt with such high servicing costs was unsustainable and builders desperate enough to borrow at such high costs were not in a position to return money to clients. Then the musical chair of refinancing this high cost debt started. It meant issuing a fresh three-year NCD to take care of the maturity of the existing one.