Debenture
“You never know what kind of setup market will present to you, and your objective is to find an opportunity wherein the risk-reward ratio is best.” By prominent Indian Investor Jaymin Shah.
Debenture
JC capital has seen people excited to see a jump in the prices will hop on the bandwagon. Market investments need patience and domain knowledge which has to be coupled with technical skills and mindset management.
A debenture is a debt instrument without collateral and is also known as a bond. It is taken up by the investor based on the credibility and reputation of the issuer. You will find that corporations and even governments issue debentures for raising capital and funds, respectively.
A debenture is a debt instrument without collateral and is also known as a bond. It is taken up by the investor based on the credibility and reputation of the issuer. You will find that corporations and even governments issue debentures for raising capital and funds, respectively.
There are two kinds of debentures
● Convertible- These can be converted into equity shares after a specific period by the issuing corporation.
● Non-convertible- these debentures cannot be converted into equity but have a higher interest rate when compared to convertible ones.
Features of debentures
● A debt instrument without collateral and term period of more than ten years
● Only creditworthiness and reputation back these bonds
● Capital and funds can be raised using debentures which often is done by big companies and government bodies.
● Those who have purchased debentures have an opportunity to convert them into equity shares which is not possible with other financial instruments.
● Only creditworthiness and reputation back these bonds
● Capital and funds can be raised using debentures which often is done by big companies and government bodies.
● Those who have purchased debentures have an opportunity to convert them into equity shares which is not possible with other financial instruments.
● Convertible- These can be converted into equity shares after a specific period by the issuing corporation.
● Non-convertible- these debentures cannot be converted into equity but have a higher interest rate when compared to convertible ones.
● Non-convertible- these debentures cannot be converted into equity but have a higher interest rate when compared to convertible ones.
Why Invest in a Debenture?
● Interest rate: the company issuing the debenture will decide the interest rate to be paid to the investor. The rate can either be fixed or floating. The floating rate is often tied to a specified benchmark, perhaps on the gains of the 10-year Treasury bond. However, the benchmark may change so will the rate of coupon or the interest rate.
● Credit rating: the credit rat9ng of the company is crucial to determine the interest rates provided to the investor. The creditworthiness will be measured by the credit rating agencies so that the investors have a better idea when they are investing. However, they are also notified about the risks they may have to undertake when investing in a debt bond.
● Maturity date: these are non-convertible debentures wherein the date of maturity is crucial. The date is imperative as it dictates when the investors can get their returns from the company. There are repayment options such as lumpsum amount at the time of maturity of the debt. There is also an option of a redemption reserve of paying a specified amount each year until there is a full payment done until maturity
● Credit rating: the credit rat9ng of the company is crucial to determine the interest rates provided to the investor. The creditworthiness will be measured by the credit rating agencies so that the investors have a better idea when they are investing. However, they are also notified about the risks they may have to undertake when investing in a debt bond.
● Maturity date: these are non-convertible debentures wherein the date of maturity is crucial. The date is imperative as it dictates when the investors can get their returns from the company. There are repayment options such as lumpsum amount at the time of maturity of the debt. There is also an option of a redemption reserve of paying a specified amount each year until there is a full payment done until maturity
JC offers services to identify the best debentures and suggest the best debentures to their clients. Despite the risk involved, investment in debentures is known to offer investors high returns in the long run. As Jwalantham will provide you the right inputs in guiding your investment Debenture’s investment not only helps an individual in wealth creation over time but also builds the nation’s capital in the process