What are NCD?
Non-Convertible Debentures (NCDs) are loans given to companies in exchange for regular interest payments and the return of the principal at the end. Unlike some other types of debentures, NCDs cannot be converted into company shares. They are a stable investment choice for earning fixed returns.
NCDs provide steady, predictable interest income and return the principal amount at maturity, offering a stable investment option with relatively low risk. They are ideal for investors seeking fixed returns without the complexity of shares.
- No Equity Dilution
- Capital Preservation
- No Equity Dilution
- Higher Yields
- reliable, fixed returns
- Transparency
What is Sub Debt?
Subordinated debt or sub debt in banking is a type of debt instrument that ranks lower than other forms of debt in terms of claims on assets or repayment in the event of liquidation or bankruptcy. It is a flexible loan or bond and is also known as junior security. Subordinated debt can allow businesses to invest in growth on their own terms.
Designed with extended repayment periods, subordinated debt offers businesses the flexibility to better manage their cash flows.It usually has a fixed maturity period, often long-term, such as 10 years or more. It comes with fewer restrictions on the use of funds compared to other forms of debt, allowing businesses to invest in growth opportunities.
- Higher Returns
- Lower Priority in Repayment
- Fixed Tenure
- Longer Maturity Period
- Flexible on Fund Usage
- Less Restrictive Covenants
FAQs
Frequently asked questions on Non-Convertible Debuntures (NCD)
NCDs are debt instruments issued by companies that offer fixed interest payments and cannot be converted into equity shares.
NCDs are open to retail investors, institutional investors, and high-net-worth individuals, depending on the issue.
NCDs offer fixed interest rates, usually higher than savings accounts or fixed deposits, with returns dependent on the issuing company's financial health.
Corporate debt refers to bonds, debentures, or other debt securities issued by companies to raise funds, offering fixed interest returns.
