NBFC Bonds

Features of NBFC Bonds

The specific features of NBFC bonds issued by Non-Banking Financial Companies with sound financial health make them distinct investment instruments.

Ideal for Investors with Moderate Risk Appetite

NBFC bonds are best for investors worried about declining FD interest rates and who wish to enjoy better returns than what banks offer. In contrast to banks, NBFCs cater to borrowers with lower credit ratings.

Higher Returns

With NBFC bonds, investors typically enjoy a yield of over 9%. It can be as high as 13.02%.

Payments

NBFC bonds offer monthly, quarterly, or annual payouts, providing a predictable income stream to investors. Some NBFCs also present cumulative payments on maturity, which is loved by many.

Maturity Date & Liquidity

These bonds have a fixed maturity date, ranging from a few months to several years when the bondholder receives the face value. NBFC bonds with less than 1-year tenure are called Commercial Papers, while long-term ones are Market Linked Debentures and Non-Convertible Debentures.

Credit Ratings

Every NBFC Bond comes with its credit rating by credit rating agencies such as CRISIL, ICRA, and others. It could be AAA assuring the investors that their money is safe or lower yet signifying safety.

Safety of Investment

The safety of an investment in NBFC bonds relies on the creditworthiness of the NBFC bond issuer. Investors must consider reliable partners to invest in these bonds.

Benefits of Investing in NBFC Bonds

• Higher returns than FDs: NBFC bonds usually pay higher interest than bank FDs or bonds.

• Tax Treatment: If held for 3 years or more, NBFC bond investors benefit from indexation (depending on the specific bond).

• Credible Investment: NBFCs issuing these bonds are typically well-capitalised and have higher credit ratings, making them a credible investment.

• Predictable returns: NBFC bonds offer predictable returns and are, therefore, an appealing option for investors seeking stability and regular payments.

Credit Rating of NBFC Bonds

Credit agencies like CRISIL, ICRA, CARE, IND, and others assess and rate the creditworthiness of NBFC bonds based on a range of parameters, including asset quality, capitalisation, earnings, market position, liquidity, and risk management.
The following sequence will help you understand the ratings.

• AAA: highest degree of safety, lowest credit risk

• AA-, AA, AA+: high degree of safety, very low credit risk

• A-, A, A+: adequate degree of safety, low credit risk

• BBB-, BBB, BBB+ : Moderate degree of safety, moderate credit risk

• BB: Moderate risk of default

• B-, B, B+: high risk of default

• C: very high risk of default

• D: In default or expected to be in default

Investing in NBFC Bonds

GoldenPi streamlines the investment process into three easy steps, making it simpler than ever to secure your financial future.

• Step 1: Sign up for an account on GoldenPi.

• Step 2: Select a bond to invest in from an array of NBFC Bonds on GoldenPi.

• Step 3: Monitor your investment & receive notifications when it matures.