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What are Market Linked Debentures (MLDs)?

Average returns0%

Average Yield8.90%

Min. Investment₹1,00,0000

What are Market Linked Debentures (MLDs)?

Market Linked Debentures or MLDS can be stated simply as debt securities where the return on investment the investor gets totally depends upon the market index’s performance.

Market Linked Debentures are basically fixed-income structured products that give no periodic coupons but pay only at maturity.

Best Market Linked Debentures (MLDs) for your investment

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FEDBANK FINANCIAL SERVICES LIMITED

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KINARA CAPITAL PRIVATE LIMITED

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SHRIRAM FINANCE LIMITED

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₹ 1,000,000

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AVANSE FINANCIAL SERVICES LIMITED

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MAHINDRA AND MAHINDRA FINANCIAL SERVICES LIMITED

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Rating
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Best Market Linked Debentures (MLDs) for your investment

Rating
All BondsIndia

Coupon(%)
All  BondsIndia

Yield(%):
All  BondsIndia

FEDBANK FINANCIAL SE...
INE007N07033

Price
100,000

Coupon
0%

Yield
17.72%

Rating
AA+

KINARA CAPITAL PRIVA...
INE200W07332

Price
100,000

Coupon
0%

Yield
11.5%

Rating
BBB+

SHRIRAM FINANCE LIMI...
INE721A07RG1

Price
1,000,000

Coupon
0%

Yield
10.66%

Rating
AA+

AVANSE FINANCIAL SER...
INE087P07279

Price
1,000,000

Coupon
0%

Yield
10.1924%

Rating
AA-

MAHINDRA AND MAHINDR...
INE774D07UO2

Price
1,000,000

Coupon
0%

Yield
10%

Rating
AAA

Types of Market-Linked Debentures

Principal-protected market linked debentures (PP-MLDs) is a structured financial instrument offering a blended product of fixed-income and market-linked returns and guaranteeing the payback of the principal amount at the time of maturity. These are popular mld investment options for risk-averse investors. These investors aim to protect their principal amount invested and are ready to get a comparatively lower interest rate than other market linked debentures.

Non-principal protected mlds are the debentures in which the investor will not get the principal amount he invested while buying it because the issuer company clearly works as per the conditions that at the time of adverse market conditions, the company is not liable to pay to its investor even the principal amount.

  • Market Linked Debentures are generally issued for a tenure ranging from 13 months to 60 months. Market Linked Debentures (MLDs) are debt instruments wherein the investors are generally sophisticated investors as this product is complex and has a high investment value.
  • MLDs come with a Capital Protection feature wherein here it is guaranteed that you will get back at least the principal amount on maturity, even if the movement in the other market is severely adverse i.e., your downside is protected because in the worst case, you will get zero return but will get your investment amount back. On the other hand, if the movement in the other market is favorable, you will get commensurate returns.
  • The ticket size of MLDs generally is Rs. 25 lahks or more. MLDS unlike binds do not pay regular fixed income. It pays the income only on maturity. It provides investors falling in the HNI category to invest in customized product.
  • Bonds and debentures - Investors are found looking for bonds and debentures. It is a good idea to have a mix asset in your portfolio to minimize risks and increase returns.
  • A percentage of investment in bonds and debentures can be a good choice for risk-averse individuals. Generally, a widely traded asset is chosen as the underlying asset so that it is not easy to manipulate
  • NCD investment – your decision related to NCD investment can prove fruitful incase you choose the issuer having good credit ratings. The level of risk is high in unsecured Non-Convertible Debentures (NCDs).
  • As an individual it is better to seek Expert Advice at BondsIndia prior to NCD investment and investment in other securities.
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Features of Market Linked Debentures
  • Risk – Risk is associated with the market linked debentures as the return calculated on the investment is highly dependent on the underlying market index. Resulting if the market couldn’t perform well, then the investor may not earn interest.
  • Credit Risk of Issuer – For any debt instrument, either (PP-MLD) or (NPP-MLD), the amount of risk, whether higher or lower, is associated from the issuer’s end. While investing, an investor should calculate the creditworthiness of the company.
  • Liquidity – MLDs are not as liquid as other debt instruments like bonds because they don’t have any secondary market, and the investor cannot resell them.
  • Maturity – Market-linked Debentures have a fixed date of maturity, and the investor is only liable to get the principal amount along with earned interest at that point in time only.
  • Returns – The return on investment in MLDs depends on the market index. Here, the investor can earn higher returns on investment if the market performs well.
Difference between MLD (Market Linked Debentures) and NCD (Non-Convertible Debentures)

  • MLDs and NCDs are two types of debt instruments companies issue to allocate the required funds from investors.

  • NCD is basically fixed-income security where the issuer assures to pay a fixed interest rate on the principal amount to the investor. Non-Convertible Debentures can’t be converted into equity shares of the issuing company, as the name suggests, "non-convertible". It has a specified maturity period, after which the investor can redeem the principal amount and the accumulated interest.

  • On the contrary, Market Linked Debentures are structured products linked to the performance of the market index or asset, like commodities, currencies and stocks. MLDs return on investments is not fixed because it is linked to the underlying asset’s performance. So, the returns on MLDs are higher than NCDs when the market performs well but can be negative or zero when the market isn’t performing well.

Why Invest in Market Linked Debentures (MLDs)?

The Market Linked Debentures have their own importance and are preferred by investors willing to take risks for a higher return on investment. Debentures are chosen for a higher fixed or floating interest rate quickly.

Advantages of Investing in Market Linked Debentures (MLDs) Bonds
Diversification

Investors look forward to investing their money in different investment options to diversify their portfolios and avail maximum returns on their investments.

Yield on Investment

Investing in Market Linked Debentures generates a high yield on investments because market linked debentures do not provide any coupons, and the investor will get the whole principal and interest earned at maturity.

Ease of Investment

Investment in Debenture has been made easy for investors. Investors today can make a comparison for a better decision. BondsIndia allows you to make comparisons online for the potential investment in bonds.

Who Should Invest in Market Linked Debentures (MLDs)?

MLD in the finance sector is also a good investment option for common investors. MLDs are commonly preferred by business families, offices, or HNIs (High Net Worth Individuals) looking for a good post-tax return.

BondsIndia is a highly sought online platform for bonds and other securities. You can browse through the different product categories for the hassle-free potential trade in bonds.

Investment in non convertible debentures can be a good choice for investors interested in receiving periodic interest on the investment made.

Frequently Asked Questions

It is the non-convertible debentures. It is an investment tool. The returns in Market Linked Debentures are not fixed.
Market Linked Debentures are majorly classified into two types – principal protected and non-principal protected.
The decision to invest in Market Linked Debentures solely lies with you. It is better to explore online the relevant information for a better decision.
Investors choose Market Linked Debentures for higher yield on investment.
The ticket size for investment in Market Linked Debentures is Rs. 25 lakh or more.
Yes, the yield in Market Linked Debentures is more than in bank FDs.
The minimum amount to be invested is Rs 1 lakh, effective January 1, 2023.
The market-linked debentures generally offer a higher yield than a bank’s fixed deposits.
You must create your account and complete the KYC online to buy bonds through BondsIndia.

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