InvestorQ : I heard some new NCDs are opening in the market in the next few days. Are they good investment opportunities?
priya Shah made post

I heard some new NCDs are opening in the market in the next few days. Are they good investment opportunities?

Answer
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Sadaf Khan answered.
1 year ago


Non-convertible debentures (NCDs) are long-term financial instruments that are fixed-income investments. They are used as tools to raise long-term capital by companies through public NCD issuance.

In lieu of the money companies borrow, they repay the amount to investors at a pre-defined rate of interest at the end of the tenure. Thus, an NCD is in many ways similar to a bank’s fixed deposit (FD), but it gives better returns than banks FDs.

While some debentures can be converted to shares after a particular point, at the sole discretion of the owner, the debentures that cannot be converted into shares or equities are called NCDs. However, investors who have invested in NCDs enjoy significantly higher returns, low risk and tax respite.

A number of companies have announced their NCDs currently; in fact, a few opened today itself.

Image courtesy: Economic Times

NCDs make for good investment options. These NCDs are offering attractive interest rates, so one can look to lock in higher yields. As interest rates overall are softening, even if there are new NCDs being launched in the days to come, they might not offer highly lucrative interest rates.