InvestorQ : What are non-convertible debentures (NCD) and are they like any bond issue?
Moii Chavate made post

What are non-convertible debentures (NCD) and are they like any bond issue?

Answer
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Sam Eswaran answered.
1 year ago


Debentures are long term financial instruments which essentially acknowledge a debt obligation to the issuer. Debentures can either be fully convertible (FCD), partially convertible (PCD) or it can be Non Convertible (NCD). An NCD cannot be converted into shares and pays a fixed rate of interest through the tenure of the NCD to the investor. Individuals and institutions invest in NCDs. An NCD is like any bond or debt instrument.

NCDs are issued with a term to maturity ranging from 2 years to 20 years. Normally, NCDs are issued by blue-chip companies who are looking to raise funds through the debt route from the financial markets. NCDs are also traded in the secondary markets and this liquidity makes NCDs additionally attractive. Normally, NCDs of reputed companies in India quote at a yield to maturity of 8.50-9.50%.