Bonds & NCD’s


Non Convertible Debentures (NCDs) or Bonds are debt investments in which an investor lends money to an entity (corporation or governmental) that borrows the funds for a specified period of time at a fixed interest rate.

Bonds/ NCD’s are the products offered by various private and public sector corporate's through public issues or on private placement basis. Bonds issued under specified categories will also offer Tax free returns as well as Tax exemption to the investors. The coupon rate offered varies based on the rating of the corporate raising the debentures. Being long term, these bonds are listed on exchange and can be traded on the exchange on listing if invested in Demat mode.

PMB - Primary Market Bonds

When bonds are originally issued to the public, this is known as the primary bond market. When a company decides that it needs to raise money for a large project, it will potentially decide to issue bonds. The companies that issue the bonds will typically work through an investment bank to help them. The investment bank will be in charge of finding buyers for the bonds and actually issuing them. In return for their services, the investment bank will receive a specific commission for each bond that is sold.

SMB - Secondary Market Bonds

The other way that bonds are sold is in the secondary market. The majority of transactions in the bond market take place in the secondary market. The secondary market represents when an individual that owns a bond sells it to another investor. Many times, institutional investors will purchase bonds through the primary market and then turn around and sell them to investors in the secondary market. In order to purchase bonds in the secondary market, an individual will need to open an account with a bond broker. A bond broker will facilitate the process of purchasing the bonds that are needed. They will help the investor research the different bonds that are available in the market and then make the purchase.

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