Corporate bonds are a type of debt security issued by companies. According to money experts, in recent years, they have witnessed a significant surge in the interest surrounding high-yield corporate bonds. However, before investing in these bonds, investors should weigh all the pros and cons attached to them. Experts suggest choosing bonds issued by companies with strong finances.
Corporate bonds in India: Increasing interest in these high-yield bonds
Abhijit Roy, CEO, GoldenPi Technologies said the growing trend can be attributed to a combination of factors that have shaped the investment landscape.
1)The impact of persistently low-interest rates has been a driving force behind the popularity of high-yield corporate bonds. Investors, faced with the challenge of finding attractive returns, have turned to these bonds as an appealing alternative to conventional options.
2)The increasing demand from investors seeking income generation has played a pivotal role in driving the interest in high-yield corporate bonds. This heightened demand has led to price increases, subsequently moderating the available yields for investors.
3)These bonds continue to offer relatively higher yields compared to traditional investment avenues like Fixed Deposits or savings accounts.
4)These bonds provide an attractive opportunity to earn higher yields while maintaining a reasonable risk profile.
Corporate bond high-yield options
Investors seeking higher yields than those offered by traditional investments should consider exploring the opportunities available in high-yield corporate bonds.
“Several high-yield options are available in the listed bond space, including ECL Finance offering an 11.30% yield, MAS Finance offering around 11% yield, and SwatantraMicrofinance offering approximately 12% yield, among others,” said Abhijit Roy.
It is important for investors to carefully review all relevant offer documents and rating rationale before making investment decisions.
The rise in interest for high-yield corporate bonds in India can be attributed to low-interest rates and increasing investor demand. These bonds offer an attractive avenue for investors seeking higher yields while effectively managing their risk exposure. As the investment landscape evolves, high-yield corporate bonds are likely to continue capturing the attention of investors seeking enhanced returns.
Looking ahead, the interest in high-yield corporate bonds is expected to continue its growth trajectory in India. Persistently low interest rates, strong corporate earnings, and investor demand all contribute to this optimistic outlook, added Roy.
Disclaimer: The views and recommendations made above are those of individual analysts, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.
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Updated: 12 Jun 2023, 02:32 PM IST