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Sunday, July 29, 2001












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Hindustan Development Corporation: Sell

Recommendation: Sell

Reshma Krishnan

This company issued a partially convertible debenture (PCD) in January 1992. The face value of the non-convertible debenture was Rs 50, redeemable in five equal instalments commencing in 1999.

Three payments have already been made, and two payments of Rs 10 each, payable in March 2002 and 2003, are left. The NCD had a coupon rate of 14 per cent, which is payable semi-annually.


The bond is rated as a default bond, which means that the company has defaulted in making a payment or is expected to. Therefore, investing in this bond carries a high element of risk. The bond now trades below its face value of Rs 20 at Rs 4. The prices have, in fact, crashed in the last couple of months. This is a bond that can be avoided by investors.


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