Non-Convertible Debentures (NCDs) are debt instruments issued by corporates through a public issue with the aim of raising capital for the long term. It has a fixed term for maturity and people buying NCDs get predefined interest declared at the time of issue.
Some debentures feature the option for conversion into shares after a certain point in time. It is done at the solo discretion of the NCD owner. But in the case of NCDs, it cannot be covered and so it is called non-convertible.
Investing in secured NCDs can be a better option for you. The risk in it is minimal as it is backed by the company’s assets. If you are a risk-averse individual, it is better to buy secured NCDs.
If you wish to earn a higher rate of interest, choose to buy unsecured NCDs. You can earn interest up to 10% if you hold your Non-Convertible Debentures (NCDs) until maturity.
NCDs also come with credit ratings. Investing in secured NCDs with an AA+ or above rating is safe. In case of the issuing company fails to pay the due payment, you can go for the liquidation of the company assets to recover your outstanding payments.
NCDs are considered one of the safe options for investment. It can be chosen for short-term or long-term investment. It is known to provide many advantages and is preferred by retail investors in the market. There is no maximum limit for the number of units you wish to purchase. The NCDs are issued to you subject to their availability.
You can keep visiting BondsIndia.com frequently to grab the opportunity to buy NCDs of different companies doing well in the market. You can earn good by investing in the NCDs of a good-performing company. NCDs are classified majorly into the below two types:
It is considered safer in comparison to unsecured NCDs because secured NCDs are backed by assets of the company issuing the Non-Convertible Debentures. Investors in the condition of the company failing to pay on time can recover their due payment by liquidating the assets of the company. The rate of interest offered on NCDs are generally low.
Unsecured NCDs as the name suggests are riskier as they do not come to you with company-backed assets. In the case of unsecured NCDs, if the company fails to make payment, unsecured NCD holders have no choice then to wait until they receive their due payments. The interest on unsecured NCDs is higher in comparison to secured NCDs.
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