1. Tenure or maturity period

The tenure of NCDs (Non-Convertible Debentures) varies by company, typically ranging from 1 to 12 years.

2. Credit rating

Credit ratings, assigned by agencies like CRISIL and ICRA, reflect the issuer's financial health.

• Higher-rated NCDs imply lower default risk but usually offer lower interest rates.
• Lower-rated NCDs carry higher risk but offer higher returns.

Read more about credit ratings here.

3. Coupon rate and interest payments

The coupon rate is the fixed interest rate paid to investors. Payments can be monthly, quarterly, semi-annually, or annually, depending on the issuer. Factors like repo rates, credit ratings, and the issuer’s risk profile affect the coupon rate.

4. Tradability on stock exchanges

NCDs can be traded like regular stocks on exchanges. However, their prices and liquidity depend on market conditions and interest payment dates.

5. Fit in a diversified portfolio

As a debt instrument, NCDs provide a steady income through periodic interest payments, making them a valuable addition to a diversified portfolio.