Understand credit ratings in NCD investments & make informed choices. Learn how ratings impact risk, returns, and investment security.

Investing in an NCD (Non-Convertible Debenture) is a great way to earn stable returns with lower risk than equity markets. However, before committing to an NCD issue, investors must carefully evaluate various factors to ensure they make informed decisions. An NCD is essentially a debt instrument that companies issue to raise funds, offering fixed interest rates over a specific tenure. While they can be lucrative, not all NCDs are created equal. 

Understanding the risks, returns, and liquidity aspects of a new NCD is crucial. This guide will help you assess the key factors before investing in an Upcoming NCD, ensuring that your investment aligns with your financial goals. 

Understanding the Credit Rating and Issuer’s Financial Health 

Before investing in any Upcoming NCD, one of the most critical aspects to consider is its credit rating. Credit rating agencies like CRISIL, ICRA, and CARE evaluate NCDs based on the financial stability of the issuer. A high rating (AAA or AA) suggests that the issuer has a strong repayment capacity, while lower-rated NCDs may carry higher default risks.