Debentures come in two types:
Convertible Debentures: Convertible bonds or bonds that can be converted into equity shares of the issuing company after a predetermined period of time. To investors, convertible bonds are more attractive because the bonds can be converted, and to companies they have the advantage that they normally have lower interest rates than non-convertible corporate bonds.
Non-Convertible Debentures : Non-convertible debentures are simply regular debentures, cannot be converted into equity shares of the liable company. They are debentures without the convertibility feature attached to them. As a result, they usually carry higher interest rates than their convertible counterparts.
NCDs might be the answer to your quest for the investment instrument that offers high returns with moderate risk while giving you the flexibility of choosing between short and long tenures.
NCDs might be the answer to your quest for the investment instrument that offers high returns with moderate risk while giving you the flexibility of choosing between short and long tenures.
An NCD can be both secured as well as unsecured. For secured debentures, which are backed by assets, in case the issuer is not able to fulfill its obligation, the assets are liquidated to repay the investors holding the debentures.