In the present work the hydrogen absorption-desorption behaviour of the Nd5Co2B6 rho-boride has been studied. A two-step hydrogen absorption: corresponding to hydrogenation and subsequent disproportionation, was observed for this compound in the temperature range 20-860 degrees C. The first event is associated with an anisotropic expansion of the rhombohedral lattice of intermetallic compound in the [001] direction (up to 12.4 vol%) and results in the formation of an interstitial Nd5Co2B6H7.0 type hydride. The second hydrogen absorption event, taking place at temperatures above 800 degrees C, results in disproportionation into NdH3-x, NdCO2B2, NdB4 and a previously unreported neodymium diboride 'NdB2'. A significant refinement of the microstructure occurs as a result of the recombination reaction to form the original Nd5Co2B6 rho-boride as the final step on the Hydrogenation-Disproportionation-Desorption-Recombination(HDDR) process.