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Time of India
3 days ago
- Business
- Time of India
Bank fixed deposits lose sheen! Post RBI rate cut, investors pick high-yielding corporate bonds; here's why
Bank fixed deposits lose sheen! Retail investors seeking enhanced returns from fixed-income portfolios are increasingly gravitating towards corporate bonds offering higher yields. Tired of too many ads? go ad free now This shift has intensified following the Reserve Bank of India's (RBI) reduction in repo rates by one percentage point since February, leading to decreased bank fixed deposit rates. These investors are focusing on state-guaranteed securities, NBFC bonds, and small finance and microfinance bonds, which provide superior returns compared to traditional bank deposits. State Bank of India's fixed deposits with 2-3 years tenure offer maximum returns of 6.7%, whilst state-guaranteed bonds from Telangana, Uttar Pradesh, Kerala and Andhra Pradesh, with 2-4 years tenure, yield returns between 9-10%. Various retail websites offer these bonds with a minimum investment requirement of ₹10,000. These platforms, known as Online Bond Platform Providers (OBPP), are SEBI-registered entities facilitating electronic bond transactions, according to an ET report. Corporate Bonds: What's On Offer Platforms such as Indiabonds, Bondbazaar, Grip Invest and Wint Wealth are experiencing increased trading activity. One platform reported doubled trading volumes in the current quarter compared to July-September 2024. Another platform witnessed a tenfold increase in new registrations compared to the previous year. Also Read | "Direct investments in bonds can typically offer an additional return of 3-5 percentage points over traditional fixed deposits," said Bondbazaar founder Suresh Darak according to the ET report. Several NBFCs and MFI bonds with AA or lower ratings from organisations like Muthoot Capital, MAS Financial, and Edelweiss Financial could potentially deliver returns of 10-12%. Tired of too many ads? go ad free now Financial advisers suggest creating a diversified portfolio of these bonds instead of concentrating investments in a single bond, whilst favouring shorter durations of 2-3 years. "Investors may consider two-, three-year bonds, which balance yield potential with visibility on credit risk and interest rate movements," said cofounder Vishal Goenka. He notes that the risk-free curve has steepened at the short to medium end with maturity of 2-3 years, making this segment attractive for those looking for better risk-adjusted returns without committing to long tenures. Also Read | "Diversify across issuers, tenures and ratings. Do not invest more than 10% in a single issuer, investing across one to three years helps manage reinvestment and interest rate risk and diversification ensures a risk-adjusted fixed-income portfolio," said Darak of Bondbazaar. Wealth managers recommend that investors monitor the company's financial performance and leadership history when purchasing high-yield bonds, considering their elevated risk levels. They advise limiting exposure by acquiring modest quantities of these bonds. (Disclaimer: Recommendations and views on the stock market and other asset classes given by experts are their own. These opinions do not represent the views of The Times of India)
Economic Times
3 days ago
- Business
- Economic Times
Retail investors shift focus to high-yield corporate bonds for better returns
Agencies Live Events (You can now subscribe to our (You can now subscribe to our ETMarkets WhatsApp channel Mumbai: Mumbai: Retail investors on the lookout for higher returns from their fixed-income portfolios are turning towards high-yielding corporate bonds. This has gathered pace after the Reserve Bank of India (RBI) cut repo rates by as much as a percentage point since February, which is forcing bank deposit rates are eyeing state-guaranteed papers, NBFC bonds and small finance and microfinance bonds , which give higher returns than bank deposits. These bonds are available through many retail websites where investors can buy them for as little as ₹10,000. These are Online Bond Platform providers (OBPP), SEBI registered platforms that facilitate buying and selling bonds are using platforms like Indiabonds, Bondbazaar, Grip Invest and Wint Wealth among others to buy these bonds, with volumes growing on these platforms. Traded volumes on one of the platforms doubled this ongoing quarter compared with July-September 2024 quarter. At another, there is 10-fold growth in signups now compared with a year earlier."Direct investments in bonds can typically offer an additional return of 3-5 percentage points over traditional fixed deposits," said Bondbazaar founder Suresh Darak. While a fixed deposit from State Bank of India can offer a maximum of 6.7% for a deposit with a tenure of 2-3 years, state-guaranteed bonds from Telangana, Uttar Pradesh, Kerala and Andhra Pradesh with a tenure of 2-4 years could offer yields of 9-10%.In addition, some NBFCs and MFI bonds rated AA or lower are available from Muthoot Capital , MAS Financial, Edelweiss Financial and could potentially offer 10-12% managers believe investors should build a portfolio of these bonds, rather than putting all their money in a single bond, and opt for shorter tenures of 2-3 years."Investors may consider two-, three-year bonds, which balance yield potential with visibility on credit risk and interest rate movements," said cofounder Vishal Goenka. He believes the risk-free curve has steepened at the short to medium end with maturity of 2-3 years, making this segment attractive for those looking for better risk-adjusted returns without committing to long tenures."Diversify across issuers, tenures and ratings. Do not invest more than 10% in a single issuer, investing across one to three years helps manage reinvestment and interest rate risk and diversification ensures a risk-adjusted fixed-income portfolio," said Darak of managers advise investors to keep a track of the financials of the company and the management's track record while buying high-yielding bonds, given that they carry higher risk. Investors should spread their risk by buying a small quantity of these bonds, they said.
Time of India
3 days ago
- Business
- Time of India
Retail investors shift focus to high-yield corporate bonds for better returns
Agencies Live Events (You can now subscribe to our (You can now subscribe to our ETMarkets WhatsApp channel Mumbai: Mumbai: Retail investors on the lookout for higher returns from their fixed-income portfolios are turning towards high-yielding corporate bonds. This has gathered pace after the Reserve Bank of India (RBI) cut repo rates by as much as a percentage point since February, which is forcing bank deposit rates are eyeing state-guaranteed papers, NBFC bonds and small finance and microfinance bonds , which give higher returns than bank deposits. These bonds are available through many retail websites where investors can buy them for as little as ₹10,000. These are Online Bond Platform providers (OBPP), SEBI registered platforms that facilitate buying and selling bonds are using platforms like Indiabonds, Bondbazaar, Grip Invest and Wint Wealth among others to buy these bonds, with volumes growing on these platforms. Traded volumes on one of the platforms doubled this ongoing quarter compared with July-September 2024 quarter. At another, there is 10-fold growth in signups now compared with a year earlier."Direct investments in bonds can typically offer an additional return of 3-5 percentage points over traditional fixed deposits," said Bondbazaar founder Suresh Darak. While a fixed deposit from State Bank of India can offer a maximum of 6.7% for a deposit with a tenure of 2-3 years, state-guaranteed bonds from Telangana, Uttar Pradesh, Kerala and Andhra Pradesh with a tenure of 2-4 years could offer yields of 9-10%.In addition, some NBFCs and MFI bonds rated AA or lower are available from Muthoot Capital , MAS Financial, Edelweiss Financial and could potentially offer 10-12% managers believe investors should build a portfolio of these bonds, rather than putting all their money in a single bond, and opt for shorter tenures of 2-3 years."Investors may consider two-, three-year bonds, which balance yield potential with visibility on credit risk and interest rate movements," said cofounder Vishal Goenka. He believes the risk-free curve has steepened at the short to medium end with maturity of 2-3 years, making this segment attractive for those looking for better risk-adjusted returns without committing to long tenures."Diversify across issuers, tenures and ratings. Do not invest more than 10% in a single issuer, investing across one to three years helps manage reinvestment and interest rate risk and diversification ensures a risk-adjusted fixed-income portfolio," said Darak of managers advise investors to keep a track of the financials of the company and the management's track record while buying high-yielding bonds, given that they carry higher risk. Investors should spread their risk by buying a small quantity of these bonds, they said.
Reuters
07-04-2025
- Business
- Reuters
Fall in yields triggers rare $4.5 billion debt issue from Indian firms at fiscal year onset
MUMBAI, April 7 (Reuters) - Indian companies are set to borrow $4.5 billion by selling bonds in the first five trading sessions of April to take advantage of the plunge in yields, a rare move as they typically do not need major funds at the start of a new financial year. The sales include planned issues worth more than $2 billion on Tuesday, the end of the five-day run that will have included at least 15 companies tapping the bond market. Yields on AAA-rated up-to-five-year corporate bonds have dropped 25-30 basis points in April, while those for the longer-term papers have plunged 20-25 bps. This "has triggered strong demand for bonds, pushing yields lower right from the beginning of April," said Venkatakrishnan Srinivasan, founder and managing partner at debt advisory firm Rockfort Fincap. "This favorable shift has encouraged issuers to front-load their fundraising plans." The Reserve Bank of India has infused more than 5.20 trillion rupees ($60.62 billion) through debt purchases and foreign exchange swaps since the start of 2025. Consequently, India's banking system liquidity moved into surplus towards March-end and has now jumped to its highest level in the last five months. Additionally, the RBI plans to buy bonds worth another 600 billion rupees in April. This unexpected rush of borrowing underscores the changing dynamics of India's financial landscape, signalling potential benefits for investors and companies in the short term. "The demand for stable returns, coupled with ongoing uncertainties in stock markets, naturally aligns with the risk-averse sentiment of investors," said Vishal Goenka, co-founder of bond trading platform Markets are expecting an additional 75 bps of rate cuts in 2025, after the central bank cut rate by 25 bps in February. While most of the issuances are dominated by non-banking financial companies, which are selling shorter-duration papers, some state-run firms are also tapping the market with longer-tenor debt. "State-run firms could lock in long-term funding at relatively lower yields. A well-rated state-run company tapping the market for five to ten years should comfortably achieve yields of 7% or lower, especially if the issue is structured well and demand is managed strategically," Rockfort Fincap's Srinivasan added. Companies that have raised or plan to raise funds in billion rupees: Companies Duration Funds raised/ in the pipeline Muthoot Finance 3 years 15 Shriram Finance 3 years 18.75 Muthoot Finance 3 years and 49 days 15 HDB Financial 3 years and 2 months 15 Tata Capital 3 year and 3 months 11.75 Aditya Birla Housing Finance 3 years and 5 months 6.65 LIC HF 4 years and 10 months 20 NABFID 5 years 14.7 Tata Capital 5 years 15 Bajaj Finance 5 years 30 Axis Finance 5 years 6 Shriram Finance 5 years and 3 months 18.75 India Infradebt 5 years and 5 months 10 Cholamandalam Investment 7 years 10 NIIF Infra Finance 7 years and 1 month 2.5 NIIF Infra Finance 9 years and 8 months 5 NABFID 10 years 42.4 Bajaj Finance 10 years 29.9 Bajaj Finance 10 years 40 Bajaj Housing Finance 10 years 20 REC 15 years 30 ($1 = 85.7760 Indian rupees)
