A non-convertible debenture (NCD) that is backed only by the cash flows of the issuing company, rather than its assets such as land, buildings or machinery (as is the case with secured NCDs). A company that manages to generate better stream of cash flows from operations and other related activities is considered more able to support its debt issuances notwithstanding the unstable nature of the underlying collateral.

By implication, if an issuer is not able to pay back the loaned amounts (as reflected in the face value of its debentures, as well as the service of it) to the investors, then no assets can be used to ascertain repayment to them. That means, such investors cannot reclaim money through asset liquidation. Given the risk involved, a company is expected to pay a higher rate for an unsecured NCD than a secured NCD.