What is Non ‐ Convertible Debenture (NCD) | NCD Investment Details.

What is Non ‐ Convertible Debenture (NCD) | NCD Investment Details.

NCDs are fixed term debt instruments in which individuals receive regular interest rates at a fixed rate.

Why it is called an unchangeable bond:
Some debt securities can be converted into stocks after a certain period of time. This is done at the discretion of the owner. However, this is not possible in the case of NCDs. That is why they are called immutable.
Although NCDs cannot be converted into stocks, they offer other benefits.

What is Non ‐ Convertible Debenture (NCD) | NCD Investment Details.

What is NCD  (Unchangeable Credits):
Higher interest rates
The return rate on NCDs is about 10-11%. This is high compared to most investment options. For example:  Fixed Deposits (FDs) are another popular scheme for people to keep their income for regular income. However, the income is very low.

There are various interest payment options, including monthly, quarterly, half-yearly and annual payments. The maturity period of an  NCD can range from 365 days to 10 years. It gives you the flexibility to choose between short and long term based on your investment goals.

Since these are listed on the stock exchanges,  NCDs are easy to withdraw. Recovering your  NCD  investment may be a little harder than selling regular shares, but they are more stable than bank fixed deposits.

The key words you need to know are  safe and insecure NCDs:
An  NCD  may or may not be protected. Secure  NCD  is supported by the assets of the issuing company. This means that the company has to fulfill its debt obligation no matter what. However, this is not the case for insecure  NCDs . This makes secure NCDs safer because of the lower default risk.

Ratings:
If you  are looking to buy NCDs , it is important to know the value of the bond before you buy it. Every company that wants to raise money through NCD  is rated by agencies like Fitch Ratings, CRISIL, ICRA and CARE. This rating agency evaluates the company based on its ability to repay the loan on time. Therefore, a lower rating indicates a higher credit risk.

Investment Term:
An unchangeable bond is a loan instrument that a company uses when it wants to raise money from the public. The company issues a credit card to a specific tenant. During this period, it pays a fixed interest rate to the buyer. It can be on a monthly, quarterly or annual basis. At the end of the lease, the money invested is returned to the buyer.

Interest income:
Interest income is a financial term used to describe income earned on a security over a period of time. With regard to NCDs, the yield of redemption is very attractive to buyers. This is because they generally offer higher interest rates compared to corporate FDs.

Things to consider before investing in NCDs :
Check the company background.
Be sure to research the history of the company before you invest.
Check if the company has raised money in the past and successfully repaid its debts.
It is a good sign if the company has fulfilled its obligations. Otherwise, you may want to avoid investing in the company.

Check the credit rating of the company:
The largest equilibrium interest rate for NCDs . However, that should not be the only reason to invest. It is important that the high interest rate offered by the company is supported by good credit ratings. Before making your decision, read the credit ratings given to the company by different rating agencies like CRISIL. The higher rating agency will have the ability to repay its debts.

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