For risk-averse retail investors, Dewan Housing Finance Corporation Ltd (DHFL) has launched Non Convertible Debentures (NCDs). The company plans to raise up to Rs 12,000 crore and subscription to the issue will close on June 4 with an option of early closure or extension as decided by the board of directors of the company or the NCD public issue committee. The allotment of bonds will be on first-come, first served basis, and will come up in six series in a tenure ranging from 3, 5, 7, 10 years offering coupon rate of 8.56-9.10%. Senior citizens will get an additional 0.10% benefit on coupon rate. Within hours of opening on Tuesday, the company got subscription of Rs 3,000 crore and the issuance is witnessing good appetite from individual investors. In this bond issue, the company has also introduced a floater rate benchmarked to Overnight Mumbai Interbank Offered Rate (MIBOR). Investors in MIBOR linked NCDs will receive interest based on overnight MIBOR rate compounded daily and payable annually. On the institutional side too, the MIBOR-linked debentures saw huge demand on the first day. The minimum application amount is Rs 10,000 collectively across all options on NCDs and in multiples of one NCD after the minimum application. The DHFL NCD has been rated CARE AAA for an amount of `15,000 crore and BWR AAA by Brickwork Ratings. The NCDs come in Series I to VII with different tenor and interest rate. For instance, in Series I, the tenor is three years and the frequency of coupon payment is annual. The coupon rate for Category 1, II, III and IV investors is 8.9%. In Series II, the tenor is five years and the frequency of coupon payment is annual. The Series III has a tenor of 7 years and the coupon rate is 9.9%. NCDs better in post-tax returns Investing in NCDs makes sense for those in the 10-20% tax brackets, as those in the lowest tax bracket can get higher post tax returns can get post tax returns around 7% for a 120-month tenure. In fact, NCDs are better than bank fixed deposits as they offer higher yields and are liquid, too. These bonds can also be bought from the stock exchange. Non-convertible debentures are of two types\u2014secured and non-secured. The secured ones are backed by assets, wherein if the company is unable to fulfil its obligations, the assets are liquidated to repay the investors. Companies issue NCDs to raise long-term funds. These debentures cannot be converted into shares or equities and lenders offer a higher rate of return compared to convertible debentures. It is advisable to buy NCDs which have highest rating. Investors should buy NCDs depending on their liquidity needs. If one is looking at liquidity after five years, then it is better to buy those NCDs which will mature in 2022. Those looking at long-term holding can buy bonds which will mature after 10 or 15 years for higher returns. Secured non-convertible debentures pay lower coupons than non-secured ones. Companies issuing non-convertible debentures offer higher rates because they carry default risk compared to bank or postal deposits. One should invest in non-convertible debentures only if he can hold them till maturity. At the time of public issue NCDs, an investor can buy the bonds by submitting a physical form with the details of PAN and identity. One can also invest online through demat account and no TDS will be applicable for NCDs in demat form.