Fixed income securities are a broad class of very liquid and highly traded debt instruments, the most common of which is a bond. They generally provides returns in the form of regular interest payments and repayments of the principal when the security reaches maturity.
They are different from equities, or stocks, since fixed income securities do not represent an ownership interest in a company, but they confer a seniority of claim, as compared to equity interests, in cases of bankruptcy or default. The instruments are issued by governments, corporations, and other entities to finance their operations. Investors buy fixed income securities to provide a predictable cashflow and to provide diversification from stocks and other asset classes.
Fixed Deposit is used as a financial instrument to raise capital by Corporate bodies. The corporates take this route to raise capital to fund their Expansion activities or use for working capital requirements.
These Fixed Deposits by Corporates are governed by the applicable provisions contained in section 73-76 of the Companies Act, 2013.
Fixed Income instrument issued by Company, Financial Institution or the Government. These instruments offer regular / fixed payment of Interest (coupons) over a longer period of time.
Non-convertible debentures (NCDs) and bonds are fixed-income securities that are issued by companies to raise capital from investors for various requirements, including the expansion or growth of an entity.
Non-convertible debentures (NCDs) and bonds are fixed-income securities that are issued by companies to raise capital from investors for various requirements, including the expansion or growth of an entity. While both these instruments carry a fixed rate of interest, they differ in terms of the duration of their issue, the issuer’s ability to redeem them, and the risk associated with them.
Fixed-Income securities provide investors with a stream of fixed periodic interest payments and the eventual return of principal at maturity. Bonds are the most common type of fixed-income security. Different bonds have different terms and credit ratings assigned to them based on the financial viability of the issuer.
In a sense, all debentures are bonds, but not all bonds are debentures. Whenever a bond is unsecured, it can be referred to as a debenture.
To complicate matters, this is the American definition of a debenture. In British usage, a debenture is a bond that is secured by company assets.
MLDs are hybrid or structured products that invest in both fixed-income and derivative instruments to generate higher returns compared to plain vanilla debt securities. The return earned on these instruments is based on the performance of the underlying index such as Nifty 50 or G-Sec.
Structured Products can be loosely defined as a savings or investment products where the return is linked to an underlying asset with pre-defined features (maturity date, coupon date, capital protection level). They belong to the range of products with 'non-traditional' investment strategies.
MLD is a type of non-convertible debenture wherein the returns are not fixed but linked to the performance of a certain market index.
