What are Market Linked Debentures (MLDs)?

market-linked debentures (PP-MLDs) is a structured financial instruments offering a blended product of fixed-income and market-linked returns and guaranteeing the payback of the principal amount at the time of maturity. These are popular mld investment options for risk-averse investors. These investors aim to protect their principal amount invested and are ready to get a comparatively lower interest rate than other market-linked debentures.

are the debentures in which the investor will not get the principal amount he invested while buying it because the issuer company clearly works as per the conditions that at the time of adverse market conditions, the company is not liable to pay to its investor even the principal amount.

• Market Linked Debentures are generally issued for a tenure ranging from 13 months to 60 months. Market Linked Debentures (MLDs) are debt instruments wherein the investors are generally sophisticated investors as this product is complex and has a high investment value.
• MLDs come with a Capital Protection feature wherein here it is guaranteed that you will get back at least the principal amount on maturity, even if the movement in the other market is severely adverse i.e., your downside is protected because in the worst case, you will get zero return but will get your investment amount back. On the other hand, if the movement in the other market is favorable, you will get commensurate returns.
• The ticket size of MLDs generally is Rs. 25 lahks or more. MLDS unlike binds do not pay regular fixed income. It pays the income only on maturity. It provides investors falling in the HNI category to invest in customized product.
• Bonds and debentures - Investors are found looking for bonds and debentures. It is a good idea to have a mix asset in your portfolio to minimize risks and increase returns.
• A percentage of investment in bonds and debentures can be a good choice for risk-averse individuals. Generally, a widely traded asset is chosen as the underlying asset so that it is not easy to manipulate
• NCD investment – your decision related to NCD investment can prove fruitful incase you choose the issuer having good credit ratings. The level of risk is high in unsecured Non-Convertible Debentures (NCDs).
• As an individual it is better to seek Expert Advice at BondsIndia prior to NCD investment and investment in other securities.