Corporate bonds are secured loans, which means all loans are backed by collateral. This feature significantly lowers the risk of an investor. Many corporate bonds tend to offer better yields than government bonds.
Security: Most corporate bonds are backed by assets, which provides investors an additional layer of protection.
Liquidity: Corporate bonds are tradeable on the exchanges and don’t have a lock-in period.
Returns: Enjoy fixed returns and potential for capital gains.
Credit ratings: Corporate bonds are rated by top credit rating agencies, allowing you to make better choices.
Taxation: Listed corporate bonds do not attract TDS.
Choice: Corporate bonds come in many varieties, including tax-free bonds, perpetual bonds, zero-coupon bonds, and commercial paper (bonds with tenures lower than one year). So, you can invest in a bond that meets your needs.
Invest in top-rated, investment-grade corporate bonds with JM Financial Services Limited. Choose from a range of securities with varying time horizons to suit your financial needs.
FACTBOX
The basic types of corporate bonds are:
Zero-Coupon Bonds: These bonds do not pay regular interest but are sold to investors at a discount to the principal amount. At maturity, the entire principal amount is paid to the investor.
Convertible bonds: These are the types of bonds that may be converted to stocks based on the underlying asset of the bond.
Floating Rate Bonds: Interest rates on these bonds fluctuate based on the prevailing market rates.
Fixed-Rate Bonds: These bonds have a fixed interest rate and pay a predetermined amount as interest.
Investment Grade Bonds: These bonds have a higher investment rating (for example, greater than BBB-).
Junk Bonds: These bonds have a high risk of default but provide a higher yield as compensation for the risk.
Top-rated corporate bonds provide reasonable returns at lower risk. However, only those with a higher risk appetite should look at lower-rated bonds.
The returns will depend on the bond and the prevailing market rates.
Corporate bonds are good investment options for those seeking higher returns than fixed deposits but are willing to bear some risk.
Corporate bonds provide fixed returns at reasonable risk. They provide higher returns than FDs and are less volatile than the equity markets.
Companies use the money raised through corporate bonds to invest in new technologies, expansion, and meet working capital requirements. The profits that these investments make are used to pay the interest on these bonds.
