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About Bond
What is Bond?
A bond is a fixed income instrument in which investor loans money to an entity (Corporate or Government) which borrows the funds for a defined period of time at a variable or fixed interest rate. Bonds are used by Corporate or Government to raise money and finance a variety of projects or activities.
What is the Bond Market?
It is a market meant for trading (i.e. buying or selling) fixed income instruments. Fixed income instruments could be securities issued by Central and State Governments, Municipal Corporations, Govt. Bodies or by Private entities like Financial institutions, Banks, Corporate, etc.
Basic components of Bond
Coupon Rate
It refers to the Rate of Interest payable by the issuer to the investor on periodic basis.
Face Value
Face value of the bond is determined by the issuer at the time of issue. It may be as low as Rs.100 or as high as Rs.10 lakhs per bond.
Maturity Date
It refers to the date on which the bond matures, or the date on which the borrower has agreed to repay the principal amount to the lender or bond holder.
Clean Price
The price arrived at without adjusting the accrued interest component is called Clean price. In secondary bond market majority deals concluded on clean price.
Dirty Price
The price arrived at after adjusting accrued interest component is called Dirty price. (e.g.: Clean Price + Accrued Interest)
YTM (Yield To Maturity)
The rate of return that an investor would earn if an investor buys the bond at current price & held it until maturity.
Call/Put Option
A call option provides issuer the right to redeem a bond before its maturity date i.e on Call date. Whereas a put option provides investor the right to give back bond to issuer before its maturity date i.e. on Put date.
YTC/YTP (Yield To Call/Put)
The rate of return that an investor would earn if an investor buys a Callable/Puttable bond at current market price & hold it until the Call/Put date.
Perpetual Bond
Perpetual bond is a bond with no fixed maturity date. Typically these bonds are issued with call option to be exercised by issuer on call date.
If call option not get exercised on call date, at defined interval and terms issuer can call back security. Yields of perpetual bonds are therefore calculated considering the call date.
Accrued Interest
If a coupon bearing security is traded between two coupon dates, the buyer has to compensate the seller by paying him that part of the interest which is due to him for the period for which he has held the security after the immediately preceding coupon date.
To, understand this let us assume A customer would like to buy 8.92% PFC 2033 bond in the secondary market and Deal execution/Settlement date is fixed as 14th Sep 2018.
Interest payment date of this security is 16th November every year. So, last interest was paid on 16th Nov 2017. No of days’ calculation between Settlement date and last interest payment date would be as below
| LAST INTEREST DATE | 16/Nov/17 |
| SETTLEMENT DATE | 14/Sep/18 |
| NO. OF DAYS | 302 |
|---|
Interest for the intervening period of 302 days will need to be paid by the buyer to the seller. Because interest payable by the company to the new holder will be for 365 days.
Calculation of accrued interest for 302 days = Rs.8.92 / 365 * 302 = Rs.7.38.
Why invest in Bonds
Regular
Fixed Income
Higher
Interest Rate
No TDS on
G.Sec, SDL, SGS
Portfolio
DiversificationTradable
Publicly
FAQs
- Investors with tax status Resident Individual, HUF, Minor, Partnership Firm, LLP and Company
- Applicant must be a Resident of India
- First holder should be the investor in whose name bonds are intended to be purchased
- First holder must have a Demat account
Yes, demat account is mandatory for first holder to buy bonds.
Yes, you can add multiple demat accounts for each investor. In case of multiple holding pattern, first holder should be the investor in whose name bonds are intended to purchase.
Yes, we have given the option to the investor to choose the demat account in which they want delivery of the bonds purchased through FundzBazar platform.
Yes, you can select multiple securities at a time of purchase.
You will get the coupon rate based on the interest frequency fixed by the issuer of the bond.
Interest amount will be credited to the bank account which is linked to your demat account.
No, there is no option available to choose the interest frequency. You will only get the option which is mentioned on the bond selection page.
No, there is no lock in period on any of the bonds available under secondary deal.
On maturity, you will get the Face Value of the bond.
Deal working is on the basis of T+1 for calculation of Accrued Interest & Settlement Date where, T = Working Transaction Day and T + 1 = Next Working day after T day.
- For online on FundzBazar, you can execute bond transaction through 3 different pay mode:
- Net banking
- NACH mandate
- UPI
- For offline, as deal settlement is on ICCL, Payment need to be done to ICCL’s Bank a/c by RTGS only. As G.Sec. and SDL are not traded on ICCL, payment to Prudent Corporate Advisory Ser. Ltd.’s Bank a/c.
Yes, you can execute single payment for purchasing multiple bonds online on FundZbazar.
No, you are buying already issued bonds under Secondary Deal.
Any one of these are valid document, preferably not older than 6 months. Client Master (CML), Demat Holding statement or DP Transaction Report.
FundzBazar team will verify the uploaded Demat proof. It may take one working day to verify the same. FundzBazar team will send intimation mail post verification.
From 1st April 2023, Both listed & Unlisted Bonds issued by Corporates will attract 10% TDS on Interest/Coupon payment. No TDS deduction on G.Sec, SDL or SGS.
- For G.Sec. and SDL bought on FundzBazar or Offline, it will take aprox. 7 working days to transfer them in buyers demat as,First it is required to be converted from our CSGL a/c to Demat and then can be transferred to buyers demat.
- Corporate Bonds – Offline Deal - Deal settled on ICCL, will be credited to buyers demat on same day.
For all successful deals, we will send digitally signed INVOICE on registered email id of buyer.
Also, any time buyer can download invoice from Bond Transaction Report.
Investor can keep track of all his Bond transactions with below online reports.
- Digitally Signed Invoice reaches on mail
- Bond Transaction Report - Details of Bond Purchase/Sell transaction & Download invoice
- Bond Holding Report - Track upcoming in‐flows in form of interest and maturity
- Reminder mails before Maturity/Call Date
- Edit Qty. for Bond sold before maturity under other product transaction report
Bond investments are subject to market risk and credit risk of issuer. Read the issue memorandum and relevant doc. before investing. We will not be responsible for any default on payment of Interest & Principle by the issuer.
Bond Issuers
Head Office: Prudent House, Panjrapole Cross Road, Nr. Polytechnic, Ambawadi, Ahmedabad - 380 015, Gujarat, India.
- [email protected]
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1800 419 5051
Prudent Corporate Advisory Services Limited
AMFI Registered Mutual Fund Distributor
CIN: L91120GJ2003PLC042458
AMFI Reg No.: ARN-9992 (Date of initial Registration; 02 September 2003; Current validity of ARN -26 August 2025)| SEBI Stock Broker Reg.: INZ000293634 | SEBI Depository Reg.: IN DP CDSL: IN-DP-477-2020 | NSE Member Id: 90209| BSE Member Id: 6733 | SEBI Research Analyst Reg.: INH000018115 |SEBI Investment Advisor Reg.: INA000004906 | PFRDA POP Reg.: POP 10092018 | IRDA Corporate Agent Reg. No. CA0869
* Mutual Fund investments are subject to market risks. Please read all scheme related documents carefully before investing.
Prudent Corporate Advisory Services Ltd. (ARN-9992) makes no warranties or representations, express or implied, on products offered through FundzBazar.com. It accepts no liability for any damages or losses, however caused, in connection with the use of, or on the reliance of its product or related services. Terms and conditions of the website are applicable. Copyright © 2024 Prudent Corporate Advisory Services Ltd.
