Every investor wishes to have investments which offer high returns and also manage liquidity and risk. A Non Convertible Debenture (NCD) is one such investment. It delivers higher returns as compared to fixed deposits after liquidity. Traditional investment options such as Fixed Deposits or PPF can offer steady income but the returns may turn out to be low. Hence NCD is another avenue which investors are exploring.
A Non Convertible Debenture is a fixed income investment option which has a specific term and interest income. Non Convertible Debentures are usually issued by companies to raise funds. When investors invest in NCDs they get the chance to enjoy high returns and low risks. As the name suggests, these debentures cannot be converted to equities at maturity. Indiabulls Consumer Finance Limited (IBCFL), a consumer finance company offering services like Personal Loans, Business Loans, Secured loans etc., has issued NCDs which have a yield of up to 11%. IBCFL has paved the way for smart NCD investment. The allotment is based on the first come first serve basis.
Here we share a few tips and factors that you should keep in mind while investing in NCDs and how should you choose the best NCD.
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1. Check the Coupon Rate
A Coupon is basically the interest rate offered by the issuer. NCDs have a comparatively higher interest returns than FDs. It is generally around 11%. This is one of the main reasons why investors are turning towards NCDs.
2. Look at the Tenure Offered
After the Coupon Rate, the tenure is the next thing you should look at. Issuers offer different tenure options depending on their NCD issue. Based on your requirements you can choose a tenure. Instruments with longer tenure are sensitive to changes in interest rates.
3. Frequency for Payment
The usual range for payment of NCDs is monthly, quarterly or yearly. You need to choose which time range suits you best as per your needs.
4. Credit Ratings
A Credit rating is a perfect way to assess the issuer’s credit performance. These ratings are an indicator of how well and how timely can the company repay the obligation. The rating is generated by agencies such as CRISIL, CARE, Brick Works, or ICRA. Ratings AA or above are generally considered as ‘good’ for investments.
5. Yield To Maturity
This is the annual return which investors earn on the NCD investment if held until maturity. When you invest in an NCD you need to look at the Yield to maturity amount and coupon rates. This will help you decide if investing in a particular NCD is worth it or not.
NCDs can help investors reach their financial goals smoothly. Indiabulls Consumer Finance Limited has opened a public issue of Secured Non Convertible Debentures. The NCD issued has an attractive coupon rate of up to 11%. It has options for 26 months, 38 months and 60 months maturity. The minimum application size is Rs. 10,000. The Issue is rated a BWR AA+|CARE AA STABLE rating, which indicates high degree of safety regarding timely serving of financial obligations. The issue has also proposed for the NCDs to be listed on both NSE and BSE. When the NCDs are listed there is no Tax Deduction at source on interest on NCDs.
Indiabulls Consumer Finance Issue is Open for subscription now, Please click here to subscribe http://www.indiabullsconsumerfinance.com/ncd/
Disclaimer: Investor should read the prospectus related to NCD before investing or Consult their Investment Advisor before investing.
