What Is Non Convertible Debenture?
Non convertible debentures (NCD) are fixed-income instruments, usually issued by high-rated companies.
Features of NCDs
- Issuance: Companies provides NCDs through open issues, which the potential investors can buy within specific period. There are options to buy NCDs from stock market.
- Credit Rating: Only companies with good credit rating can have the authorization to issue NCDs. Credit rating agencies also rate NCDs itself. Ratings are subject to revisions regularly.
- Interest: The higher credit rating an NCD has, the lesser interest it offers. Almost every NCD promises dual earning growth based and interest-based or cumulative opportunities.
- Return Rates: Usually, NCDs give you higher returns, compared to corporate FDs, bank FDs and government bonds.