What is it?
NCDs are debt instruments issued by companies to raise funds. They pay a fixed interest (coupon) for a specified tenure and cannot be converted into shares.
Key Features
- Fixed coupon rate
- Defined tenure
- Secured and unsecured variants
- Often listed on exchanges
Potential Benefits
- Predictable interest payouts
- Choice of monthly, annual or cumulative options
- Can diversify a fixed-income portfolio
Risks
- Credit / default risk of the issuer
- Limited secondary-market liquidity
- Interest-rate risk if sold before maturity
Who May Consider It?
- Investors seeking regular income
- Those who can evaluate credit ratings
- Investors with defined holding periods
Frequently asked questions
1. Are NCDs safe?
No investment is risk-free. NCD safety depends on the issuer's credit quality; check ratings and disclosures carefully.
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