May 2023 Economic Times
The recent tax changes by the government where the benefit of long-term capital gains tax on debt mutual funds was withdrawn has created a level playing field, drawing investor attention towards bonds.
The recent tax changes by the government where the benefit of long-term capital gains tax on debt mutual funds was withdrawn has created a level playing field, drawing investor attention towards bonds.
“Making a private placement for corporates is more cost-effective and fast”.
“Investors can earn 40-200 basis points more than bank deposits of similar tenure by investing in a mix of T-bills and ultra short-term funds”.
SEBI has reduced the face value of bonds in private placement from Rs 10 lakh to Rs 1 lakh.
“Even though there is no increase in rates of PPF, it offers the highest post-tax return to investors”.
One should note that the NCD issue comes with a fair bit of credit risk as it is not rated AAA.
Each NCD will be split into four parts and each of the STRPPs will mature in three, five, seven and nine years.
“For the time being, investors should remain invested in short-duration debt funds with maturities up to three years as the yields are very attractive”.
The interest rates are not that attractive as some banks are now offering some 8 percent on their fixed deposits.
Diversify across sectors and match your investment horizon with paper’s tenor to avoid liquidity issues