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Companies paln for Non-Convertible Debentures (NCDs)

Senior citizens and pensioners need not worry about the recent fall in interest rates on bank term deposits. Instead, one can invest in corporate debt instruments that carry coupon rates that are 3-4 per cent above bank rates.

Many companies are expected to bring in debt issues, largely non-convertible debentures (NCDs), to raise around Rs 20,000 crore from the market within the next six months.

Companies like L&T Finance, Shriram Transport Finance, Tech Mahindra and Tata Capital recently raised funds over Rs 3,300 crore via NCDs. Companies preparing to launch debt issues include Dewan Housing Finance, Gujarat Industrial Finance Tech-City, IIFCL, Jaiprakash Associates and Srei Infrastructure.

Suresh Sadagopan, certified financial planner, Ladder 7 Financial Advisory, Mumbai, says: "Now is a good time to invest in NCDs as bank fixed deposit (FD) rates have seen a decline. As NCDs offer 3 per cent higher interest than FDs, they are a good option. However, one must look for a good company with a good track record. Serviceability can be an issue, therefore, due diligence of the company should be done before investing."

So, attractive as they may seem, make sure that you do your homework on the company before investing in its NCD.

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