Best Corporate Bonds to Invest in India

A corporation issue bonds to investors when it needs money for operations, acquisitions, or expansions. From the investor's perspective, they provide capital to enterprises while depending on a third-party assessment of a company's capacity to satisfy both current and future payment obligations provided by credit reporting agencies. In contrast to equity, investors are not granted ownership rights to the company. The duration and interest rates have already been decided. As a result, there is less space for error.

 

What is a mutual fund for corporate bonds?

A business can raise money by issuing corporate bonds as debt. The secondary market offers active trading opportunities for corporate bonds. Still, investors loan the company in exchange for several interest payments when they purchase one.

Debt funds, called "corporate bond funds," lend a minimum of 80% of their capital to organizations with the best possible credit ratings. Only businesses with excellent financial standing and a high likelihood of making timely payments to lenders are awarded this rating.

These bonds are typically medium- to long-term financial instruments with a range of maturities from one year to twenty years.

Corporate bonds make up a sizable share of the bond market in India. Companies issue debt because doing so allows them to raise capital more cheaply without diluting their share capital.

Corporate bonds offer a higher return since they have a more significant risk of default than government bonds.

NHAI, REC, PFC, NTPC, HDFC Limited, NHPC, Muthoot Capital, Reliance Industries, L&T Finance, ICICI Bank, and others are some of the bond issuers and borrowers.

Depending on its credit rating, a corporate bond may be of investment grade or non-investment grade. Investment-grade bonds include AAA, AA, A, and BBB, whereas non-investment-grade bonds range from BB to D. (these can also be referred to as high-yield or junk bonds).

 

Corporate Bond Funds' Benefits

1. Ideal for the money you won't need for two to three years.

2. Compared to bank fixed deposits with a similar term, funds in this category typically offer higher returns.

3. You will receive tax-efficient returns if you hold them for three or more years because they are eligible for indexation benefits.

 

List of some of the Best Corporate Bonds to Invest in India

1) 7.25% ICICI HOME FIN 12 AUG 2031

- Name of the Issuer– ICICI HOME FINANCE COMPANY LIMITED

- Name of the Security– 7.25% ICICI HOME FIN 12 AUG 2031

- ISIN – INE071G07439

- Face Value – ₹ 10,00,000.00

- Type Of Bond – NCD TAXABLE

- Security – SECURED

- Coupon – 7.25%

- Last Traded Yield – 7.2700%

- Last Traded Price – ₹ 99.8000

- Rating – AAA

- Call/Put Date – NA

- IP Frequency – ANNUALLY

- Taxation – NCD TAXABLE

- Allotment Date – 12 Aug 2021

- Maturity Date – 12 Aug 2031

- Mode Of Issue – Private

 

2) 10.45% FULLERTON 03 NOV 2023

- Name of the Issuer – FULLERTON INDIA CREDIT COMPANY LTD

- Name of the Security – 10.45% FULLERTON 03 NOV 2023

- Taxation – NCD TAXABLE

- Type Of Bond – NCD TAXABLE

- Security – SECURED

- ISIN – INE535H07357

- Face Value – ₹ 5,00,000.00

- Last Traded Yield – 0.0000%

- Last Traded Price – ₹ 100.0000

- Rating – AAA

 

3) 7.30% TATA CAP FIN SER 27 JUN 2031

- Name of the Issuer – TATA CAPITAL FINANCIAL SERVICES LIMITED

- Name of the Security – 7.30% TATA CAP FIN SER 27 JUN 2031

- ISIN – INE306N08433

- Face Value – ₹ 10,00,000.00

- Last Traded Yield – 7.4000%

- Last Traded Price – ₹ 99.4500

- Taxation – NCD TAXABLE

- Rating – AAA

- Type Of Bond – NCD TAXABLE

- Security – UNSECURED

 

Investor should diversify their portfolio rather than putting all of their money into one item. They can reduce their risk with the use of a well-balanced portfolio.

A corporate bond's benefit for diversification is one of its positive traits. Bonds and stocks do not correlate well. Therefore, including bonds in your portfolio can reduce your loss in a recession.

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