Bonds signify debt obligations – and therefore are a form of borrowing. If a company issues a bond, the money they receive in return is a loan and must be repaid with interest over time. The buyers of bonds, then, are essentially lenders. Generally, these lenders give some asset such as building or plant as an assurance of repayment. In case, the borrower fails to repay the loan, these assets that are known as “collateral”, would be sold in the market and the lender would get the money in proportion to his lending.
The Bond Market in India with the liberalization has been transformed completely. The opening up of the financial market at present has influenced several foreign investors holding upto 30% (approximately) of the financial in the form of fixed income to invest in the bond market in India. Broadly, there are 4 types of entities that issue bonds in India:
At G K Globas, we help our clients in identifying the right bond that they should invest in after understanding their needs, risk-taking appetite, time horizon and a bunch of other factors so that the return on investment meets expectation.