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Non-convertible debentures(NCDs) are a financial instrument that is used by companies to raise long-term capital. This is done through a public issue.<br>NCDs(https://www.edelweiss.in/primary-issues/ncd-listing/edelweiss-financial-services-limited---apr21-ncd-7-244-28229) are a debt instrument with a fixed tenure and people who invest in these receive regular interest at a certain rate.<br>Read this presentation to learn more about NCDs.
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Introduction Non-convertible debentures(NCDs) are a financial instrument that is used by companies to raise long-term capital. This is done through a public issue. NCDs are a debt instrument with a fixed tenure and people who invest in these receive regular interest at a certain rate. Some debentures can be converted into shares after a certain point in time. This is done at the discretion of the owner. However, this is not possible in the case of NCDs. That’s why they are known as non-convertible. Even though NCDs cannot be converted into shares, they offer other benefits.
Things to consider before investing in ncd Check company’s background Make sure you research the company’s history before you invest. Check if the company has raised money in the past and has successfully repaid its debts. It is a good sign if the company has met its obligations. Else, you may want to avoid investing in the company. Check company’s credit rating The biggest draw for NCDs is the interest rate offered. However, that should not be the sole reason to invest. It is important that the high interest rate offered by the company is backed by good credit ratings. Study the credit ratings given to the company by different rating agencies such as CRISIL before you make your decision. A higher rating will suggest the company has the ability to repay its loans.
