NCD public issue stands for Non-Convertible Debenture. NCD is essentially a debt instrument with the fixed tenure that pays a certain rate of interest monthly, quarterly, and annually or at the end of the pre-specified tenure, unlike debentures which can be exchanged for company stocks. Non-Convertible Debentures cannot be converted. NCD has a higher rate of interest. NCD are tradable instruments and they are listed with stock exchanges. When one buys a corporate bond, one lends money to the company. In exchange, the company promises to return the money on a specified maturity date along with a stated rate of interest.
Corporate bonds are debt securities. They are considered as a long-term investment option. The maturity period of these securities ranges from 90days to 20 years.
The NCD new public issue is similar to the IPO process. Investors apply for the shares through the broker and based on the availability or based on the policy the investor receives the number of shares in his Demat-account in NCD public issue BSE India.
The NCD has a higher rate of interest when compared to fixed deposits, while banks offer an interest rate of 8% whereas, NCD offers above 11% interest for the invested amount. NCD’s are more liquidity than bank fixed deposits as we can sell before the maturity dates just like we sell stocks. Fixed deposits can be converted to cash before maturity with some penalty for it. Buying and selling NCD favour’s both the issuer of the NCD and the investor of the NCD. NCD public issue BSE, BSE is one of the stock exchanges in India.
NCD new public issue are Muthoottu Mini Financiers NCD, Tata Capital Housing Finance NCD, Shriram Transport Finance NCD. The Upcoming NCD public issue has an open and close date in which the investor needs to apply during the given time period. Upcoming NCD public issue announce the allocation results after the closing date.
NCD Issues Open in India
|Company Name||Issue Open||Issue Close||Issue Size - Base (Rs Cr)||Issue Size - Shelf (Rs Cr)||Rating|
|Muthoot Vehicle & Asset Fin Ltd||Feb 25, 2020||Mar 11, 2020||100||200||CRISIL A/ Stable; CARE BBB+/ Stable|
|JM Financial Products Ltd||Feb 13, 2020||Mar 09, 2020||100||2000||ICRA AA/Stable, CRISIL AA/Stable|
|Edelweiss Finance & Investments Ltd||Jan 23, 2020||Jan 31, 2020||125||250||CRISIL AA-/ Stable; CARE AA-/ Stable|
|Muthoottu Mini Financiers Ltd||Jan 20, 2020||Feb 12, 2020||100||200||CARE BBB- /Stable|
|Muthoot Fincorp Limited||Jan 09, 2020||Feb 04, 2020||250||480||BWR A+ /Stable, CRISIL A/Stable|
What is a secured NCD issue?
A secured NCD is one of the assets that is backed up by the company’s assets. In case the company fails to pay, investors can claim payment through liquidation of assets. Secured Non-convertible Debentures are less risker when compared to Unsecured NCD. The interest rate is low when compared to Unsecured NCD.
In NCD we have Call and Put options as well:
Call Option: Company has an option to ask the investor to surrender their debentures before the maturity date. This is done when the company has enough money or if the interest rates go down.
Put option: Investor has the option to surrender the debenture before the maturity date. This is done mostly when the interest rates go up.
Are NCDs good investments?
Every investor has a different risk about his investment. NCD investment are fixed-income sources that offer a fixed rate of interest on investments. NCD’s are of high liquidity, high returns, and a low-risk investment which can provide tax benefits.
Investing in any type you need to check the risk analysis and the returns that you need. Every investor has a different risk analysis. Since the equity markets are full of short-term volatility, they are not suitable for everyone’s risk. For which debentures are the best investment option for the investors. There is a type of proof, like bonds. By this, we can conclude that NCD investment is a good investment.
Are NCD issues are taxable?
There are many types of tax issues in NCD:
The main type is income through the interest of NCD investment and tax treatment is same as the other income interest as FD’s. Interest rate will be same as the income from other sources.
Second is capital gains. Capital gain rises when you sell the NCDs in stock exchange. Short term capital gains is defined as the NCD sold in the short of 9-12 months from the date the investor received and if investor committed to sell NCDs after 12 months, the gain is called long term capital gains.
Can I sell NCD before maturity?
NCDs public issue gets listed on stock exchanges where investors can buy or sell it even before maturity. The returns earned through selling in secondary market is called as Capital gains. In some cases, there may be negative returns to the investor, when he sells in secondary market when interest rates are high. Premium demand is demanded if there is a fall in interest after buying the NCD while selling in stock market. The maturity period of these securities ranges from 90days to 20 years.
What are the main types of NCDs?
There are two types of NCDs:
Secured NCDs: Secured NCDs are safe and secured because they are backed up by the company. In case the company fails to pay money, who are holding the then the investors can get it by liquidating the company assets. If the company failed to return the money to investors then they can get by liquidating the company assets. In secured NCD the investor gets low interest rate.
Unsecured NCDs: Unsecured NCDs is riskier when compared to the above type as this type of NCD does not back up the company assets. When the company reverts on its payment, the investor needs to wait for the company announcement to get his investment back. In Unsecured NCD’s the interest rates are higher.