- Investors should evaluate the credit rating of the issuer to assess the creditworthiness of the company and the likelihood of default. Higher credit ratings indicate lower credit risk and vice versa.
- Investors should evaluate the yield of the debenture to determine the potential return on investment. The yield of the debenture should be compared to other fixed-income securities with similar risk profiles.
- The maturity date of the debenture should be considered, as longer maturity dates typically offer higher yields but may also carry higher risks.
- Convertible debentures allow investors to convert the debenture into equity shares of the company at a predetermined price. Investors should consider the conversion features and the potential for capital appreciation.
- Debentures are sensitive to changes in interest rates. Investors should evaluate the potential impact of interest rate changes on the value of the debenture.
- Investors should consider the liquidity of the debenture, as it may be difficult to sell the debenture before maturity. If investors require liquidity, they may consider investing in debentures that trade in the secondary market.
- Investors should evaluate the financial position of the company, including its revenue, profits, and cash flow, to assess the ability of the company to service its debt obligations.
