In the simple language, the word “bond” relates to the etymology of “bind”.In the sense “instrument binding one to pay a sum to another”; use of the word “bond” dates from at least the 1590s.The bond is a debt security, under which the issuer owes the holders a debt and (depending on the terms of the bond)is obliged to pay them interest (the coupon) or to repay the principal at a later date, termed the maturity date. Interest is usually payable at fixed intervals (semiannual, annual, sometimes monthly).Very often the bond is negotiable, that is, the ownership of the instrument can be transferred in the secondary market. This means that once the transfer agents at the bank medallion stamp the bond, it is highly liquid on the secondary market.

Thus a bond is a form of loan or IOU: the holder of the bond is the lender (creditor), the issuer of the bond is the borrower (debtor), and the coupon is the interest. Bonds provide the borrower with external funds to finance long-term investments, or, in the case of government bonds, to finance current expenditure. Bonds and stocks are both securities, but the major difference between the two is that (capital) stockholders have an equity stake in a company (that is, they are owners), whereas bondholders have a creditor stake in the company (that is, they are lenders). Being a creditor, bondholders have priority over stockholders. This means they will be repaid in advance of stockholders, but will rank behind secured creditors, in the event of bankruptcy. Another difference is that bonds usually have a defined term, or maturity, after which the bond is redeemed, whereas stocks typically remain outstanding indefinitely. An exception is an irredeemable bond, such as a CONSOL, which is a perpetuity, that is, a bond with no maturity.

Bond yield is the return an investor realizes on a bond. The current yield is a function of the bond’s price and
its coupon or interest payment, which will be more accurate than the coupon yield if the price of the bond is different than its face value. Investments in Fixed Income are investments in debt securities that provide a stable and regular higher income than traditional fixed income investments like Bank Fixed Deposits and Corporate FDs.

Investing in diversified fixed income securities can enable efficient portfolio diversification and at the same time mitigate portfolio risk to achieve investment goals Offset your investments in MFs, Stocks or Real Estate. Bonds are less volatile and less risky than most assets and offer more stable returns. For example when stocks fall, bond prices usually rise. Bonds offer a predictable income stream by paying interest at regular frequency like monthly, quarterly or annually. Use the regular income to manage ongoing expenses. Interest rates on corporate bonds are higher that bank FD rates. They are also tradable on exchange thereby providing liquidity without exit penalty unlike FDs.

The bonds coming soon are as follows:

1.SPANDANA SPHOORTY FINANCIAL LIMITED
Essentials: Coupon 11.50%,Maturity Jan 2023,Rating Ind-Ra A, Interest Payment QUARTERLY, Yield 11.25%,Price 1,02,947.

2.THE KARUR VYSYA BANK LIMITED
Essentials: Coupon 11.95%,Maturity Jun 2029,Rating ICRA A, Interest Payment ANNUALLY, Yield 10.85%,Price 1,02,991.

3.THE KARNATAKA BANK LIMITED
Essentials: Coupon 12.00%,Maturity Nov 2028,Rating CARE A, Interest Payment ANNUALLY, Yield 10.70%,Price 1,06,909.

4.U.P. POWER CORPORATION LIMITED
Essentials: Coupon 10.15%,Maturity Jan 2022,Rating Ind-Ra A+(CE),Interest Payment QUARTERLY, Yield 8.50%.Price .10,25,524

5.INDIAN RAILWAY FINANCE CORPORATION LIMITED
Essentials: Coupon Rate (Returns)7.35%,RatingCARE AAA, Interest Payment ANNUALLY, Maturity after 10 years, Yield 4.52 %,Price 1247.

6.BHARAT Bond ETF 2023 COUPON 5.12%,NAV as on 20-Mar-20 1,110.9519.
7.BHARAT Bond ETF 2025 COUPON 6.15%,NAV as on 20-Mar-20 1,015.772.
8.BHARAT Bond ETF 2030 COUPON 7.11% NAV as on 20-Mar-20 1,114.1887.
9.BHARAT Bond ETF 2031 COUPON 6.99%,NAV as on 20-Mar-20 1,001.1109.

If you find any mistake please contact the support@largecapindia.com. This article is general in nature. It does not constitute a recommendation to buy and sell any stock, Bonds and does not take account of your objectives, or your financial situation. LargecapIndia has no position in the Bonds mentioned. We do not confirm the authenticity of any published contents. LargecapIndia aim to bring you long term focused research analysis driven by fundamentals.