Prime Debt outlook 2023: Handling a rate pause

After bungee jumping off a cliff, it is good to wait for the adrenaline rush to wear off. Indian bond markets are in exactly this situation now. After falling sharply as rates rose, bond prices are pausing to take a breath. In our debt outlook last year we expected rates to continue their upward climb and recommended strategies to play this. During the course of 2023, we think interest rates could top out and stabilise. We tell you what this will mean for your debt portfolio.

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Prime Bond recommendation: An AT1 bond with high yield

At PrimeInvestor, we took an ultra-conservative approach to debt investments during Covid and just after it. But with economic recovery taking root, interest rates rising and credit offtake improving, we believe investors can shoot for higher yields by taking on some credit risk. Perpetual bonds from banks with sound financials are one option, offering good reward for risks taken. We are covering one such bond here.

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The search for high interest rates: where to draw the line

Low interest rates and rising inflation are a dilemma for savers. There is a constant conflict between risk and return. As far as the retail investor is concerned, he looks forward to being ‘protected’ by the regulators. Financial literacy does not come easy and ninety percent of us would not know the difference between a fixed deposit and a debenture.  And we would be forgiven in thinking that the term ‘secured’ debenture or bond means that every rupee we invest is safe! But where should we draw the line in the search for high interest rates?

Have short term money to park? Here’s a cast iron option

Lately, it is not just India’s stock market that has been hopping all over the place like an impatient child. The bond market has been doing it too! India’s 10-year government bond yield, which sets the benchmark for all other debt instruments, climbed vertically from 5.8% in July 2020 to 7.61% in June 2022. But after that, it has been unable to make up its mind on whether to climb higher or pause for breath. 

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How are deposits, bonds and debt funds taxed?

Deposits, bonds and debt funds are great ways to diversify one’s portfolio. But the taxation on these instruments can decide whether an option is attractive or unattractive on a post-tax basis. Taxation, though varies across instruments and can be quite complex. The fact that not all debt instruments are taxed in the same way compounds the decision making dilemma on which option to choose. This write-up will break down the taxation aspect of popular debt instruments for resident individuals.

Prime Review: TN Power Finance and Infrastructure Fixed Deposit

When interest rates on bank deposits hit rock-bottom in the last few years, the fixed deposit (FD) programme from Tamil Nadu Power Finance and Infrastructure Corporation (TNPFIC) turned quite a hit. This NBFC owned by the Tamil Nadu Government offers high interest rates of 7-8% on FDs and has a friendly online interface, making it very popular with fixed income seekers and seniors. We have received a number of queries from many of you, about this deposit.  

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Prime Strategy: Time to lock into high yields and how

Eighteen months ago, it would have been difficult to imagine that there would be a time when debt investors in India would be spoilt for choice. But the sharp rise in market interest rates in India in the past year or so, has led to this happy situation. Between December 2020 and now, yields on …

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