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Non-convertible Debentures (NCDs)
A non-convertible debenture is a way to raise long-term capital for companies through public issues. Since these debentures lack the option of convertibility, they usually offer higher interest rates compared to convertible debentures.NCDs have a fixed maturity date with higher returns, liquidity, low risk, and tax benefits.
There are two types of NCDs –
- Secured NCDs are backed by the assets of the company. If the company cannot pay, the investors can claim their debt through the liquidation of assets.
- Unsecured NCDs are riskier as they are not backed by any asset of the company.
