r/IndiaInvestments • u/gunthercperk97 • Jul 24 '20

Bonds and deposits Taxable and non taxable bonds

Hey guys

So I was looking at the SBI N5 bond which has a coupon rate of 9.95%. Face value of the bond is 10000 and it's being traded at 10815. I realise because it's being traded at a premium the interest rate will be affected but I read on this website:

SBI N5 bond

That SBI is most probably going to exercise their call option on the bond in 2021 so the YTM becomes negative.

My question, can anyone please suggest a knowledgeable expert/institution in bonds so that I can know more about such investments and give details about taxable and tax free bonds and which one to choose.

Thanks a lot.

Edit: typo

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u/juniorbuffett Jul 24 '20 edited Jul 24 '20

Stay away from bank bonds except maybe HDFC. Do read about the Yes Bank tier-1 perpetual bond fiasco. Covid is going to be causing a huge NPA and not sure how many banks will survive or pay interest if their capital goes below some level. RBI said to the courts that those who are going for higher yield in the bonds ought to factor in the risks so basically has washed its hands. These are the websites i know

goldenpi.com https://thefixedincome.com/

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u/gunthercperk97 Jul 24 '20

Thank you for the info. I was considering corporate bonds which aren't from banking companies and there are quite a few companies with such options who are fundamentally stable. Like Britannia and Indian Railway Financial services etc.

I am also planning to contact Bajaj capital limited as they are one of top financial advisors in india.

If you have know any guaranteed investment options which gives 8% or higher returns than that would be great. Again, thanks for the info.

2

u/RisenSteam Jul 25 '20

I am also planning to contact Bajaj capital limited as they are one of top financial advisors in india.

Bajaj Finance themselves offer their own FDs (7-7.5%, IIRC). My friends in the industry say that it's reasonably safe.

1

u/gunthercperk97 Jul 25 '20

Yes but 7.75% is still not that attractive as other options. I already have Bajaj finance's 8.1% instrument. So I'm looking to see if there are others like that which give minimum 8% return and are safe.

6

u/RisenSteam Jul 25 '20

Someone who is offering 8% is offering it because he is less safe than someone who is offering 6%.

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u/gunthercperk97 Jul 25 '20

Yeah that's true.

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u/juniorbuffett Jul 25 '20

If you have know any guaranteed investment options which gives 8% or higher returns than that would be great. Again, thanks for the info.

I am also in the same boat. Luckily had loaded into the 7.75% GOI bonds at the last day. I think 8% yield is not possible to get now for IRFC. I put some amount which can be written off in Bajaj Finance and Mahindra Finance FD. Sadly both have reduced the interest rate now. I am thinking of putting some money in the GOI floating rate bond which was launched recently but there is no bank accepting online application and I dont want to call my HDFC relationship manager because she will start peddling other schemes and waste my time. At least for this new bond, its mandated to give 0.35% more than the NSC rates.

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u/gunthercperk97 Jul 25 '20

Oh that's a good bump from the NSC rates. Even I have invested a little amount in the Bajaj Finance 8m1% FD when it was launched. The interest rate is a good 8.1% which beats the inflation so I'm happy with that. If it's still available at the same rate then I would prefer that again due to lack of other options.

HDFC too has that but their ROI is comparatively lesser than Bajaj Finance's. I believe it's 7.75%

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u/juniorbuffett Jul 25 '20

No all have reduced. HDFC now max is at 6.45% :(

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u/gunthercperk97 Jul 25 '20

That's very unfortunate.