GoldenPi Review- Corporate Bond MarketPlace

Public Issues of Corporate Bonds – An Opportunity For Indian ...

GoldenPi is the only platform in India providing access to corporate bonds which are not readily available for trading.As the FD rates are at all time low, yielding close to 4% per annum most people don’t know where to keep money. You can only allocate a percentage of your portfolio to alternate ! The hunt for the yield made lot of people lose money in some debt funds which had high yields.In normal times diversification through debt fund is a strength but in an extremely stressed scenario all the weak credit in a fund can collapse together eg. BOI Axa therefore less but good credit is important in the current situation. Companies which have lot of cash to ride out the market turmoil are the only one we can rely on!

Is there a mid point where we can get decent yield at reasonably low risk? The solution is corporate bonds. Until now it was very difficult for retail investors to buy corporate bonds from the exchange due to less liquidity. Treasury and HNI are able to buy these from their brokers.It’s better to choose few and credible names than to put money in a fund with multiple risky credit!

Now it is possible to buy and trade corporate bonds for retails investors using a fintech platform called GoldenPi!

Why Corporate Bonds on GoldenPi?

While there are alternative investment platform like  Klubworks, Finzy , Tradeced ,GrowFix and Grip Invest  but bonds are an essential asset for diversification

  • The yields are higher than most FD and you can choose the borrower you want to invest in
  • You can sell the bond earlier for liquidity or as a trading call

How to make higher returns on your bond Investment.

There are 3 ways to make returns from your bond investment:

  • Hold the bond till maturity and earn interest
  • Hold the bond and when market stabilizes or when interest rate dips sell the bond at lower yield and book profit i.e say HDFC 2 year bond trading at 8% today. In 3 months it might trade at 7%,hence your bond portfolio (Market Value is negatively correlated to Interest )will make money which you can capitalize by selling the bond on exchange to someone who is willing to buy or sell it on the Golden PI platform.
  • Carry Return: This is an interesting aspect lot of people are unaware of .

For a similar bond risk is higher for a longer tenor hence higher return. Carry is a form of reward for holding a long-dated security.

A 2 year HDFC bond might be yielding 8% and a 1 year 7%.

If you hold 2 year HDFC 8% for 1 year you will get 1% extra as it has to yield 7% after 1 year hence you end making close 9% instead of 8%

How to buy bonds on GoldenPi ?

You can buy bonds in GoldenPI. It is a platform which sources quotes from all the top brokers in the market.

You can register for free here :Register GoldenPI

There are no charges for buying bonds and they are delivered to your Demat account just like shares.

Company Background: Backed by credible promoters . Customer service is commendable too!

Which Bond to buy?

In these tough times it’s paramount you buy the safest of the names. Some of the best names you can consider buying are:

HDFC
ICICI
SBI

As it is evident the FD of these same company give 5-6% but we can get a 2-3% higher yield in the corporate bond market.

Conclusion

corporate bonds are a good substitute for FD provided you choose good names and are not looking for very high liquidity!

Randomwalk

I dabble in Quantitative finance, Portfolio Construction and Derivative trading .Interested in exploring innovative financial products and trading strategies

9 thoughts to “GoldenPi Review- Corporate Bond MarketPlace”

  1. They have UP Power secured bonds listed at discount. The returns are pretty good. What are your views about those bonds? The secured nature makes them quite stable despite bad financial state of the discom, but I am not able the understand the rationale behind the discounted price.

    1. Theoretically they are backed by UP government they will make good incase of shortage of money to pay creditors. Only risk is under exceptional circumstances when the government fails to pay!Seems improbable but cant be ruled out .As the company is loss making people are doubting the credit worthiness

      Here is an interesting article

      https://economictimes.indiatimes.com/markets/stocks/news/dhfl-exposure-may-dent-uppcl-bonds-but-impact-credit-neutral-ind-ra/articleshow/71984188.cms?from=mdr

  2. How can we sell bonds before maturity that are bought from Goldenpi? I understand that when we buy from Goldenpi the bond will be credited to demat account. If I need to sell these bonds does Goldenpi provide option to sell in secondary market?

    1. yes they do. You have to provide a DIS slip from broker to them which will enable to bonds from your demat to someone else. some broker like Angel provide E-DIS too
      !

    1. So there are 2 type of risk :credit and market
      CRedit you can evaluate by checking the fundamentals of the issuer, any adverse news ,Asset liability profile etc
      Market risk= change in price due to interest,more relevant for longer tenor bonds
      To price a bond you can calculate Yield to maturity.If you feel uncomfortable doing the maths just google yTM calculator.will give the current yield of the bond

  3. Thanks alot.It would be great if you can advise how to evaluate credit risk precisely and assses chances of default.For instance,lets say shri ram transport finance.

    1. well it require studying the company in detail ,think of yourself as a lender,but a good place to start is
      1) Annual Report: check financials like DEBT/Equity,profitability, capital adequacy ratio,interest coverage ratio etc.
      2)check latest rating rational of credit agency: eg
      for SRTF crisil rating rationale is available publically
      https://www.crisil.com/mnt/winshare/Ratings/RatingList/RatingDocs/Shriram_Transport_Finance_Company_Limited_March_06_2020_RR.html

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