There are multiple fixed income investment options in India to consider basis the risk and return expectations. Below is the list of investment options with risk and returns profile:
- Fixed Deposit: A super popular investment vehicle to earn a fixed return on monthly, quarterly, or yearly basis. Fixed deposit options are being offered by Banks, and reputed corporates who are managing deposit taking NBFCs such as Bajaj Group, Muthoot Group, Shriram Group etc.
The return on fixed deposits changes as per the RBIs stance on the money management in the market. Presently, it ranges from 6.90% to 9% from the banks and corporates. The deposit in the banks is guaranteed till Rs. 5 lakhs, beyond which it is not if a bank goes down. With corporates nothing is guaranteed.
- Non-Convertible Debenture (NCDs): NCDs are debt instruments issued by private and public limited companies to raise loan primarily from private & institutional investors who subscribe the NCDs. NCDs can be listed or non listed.
NCDs can be structured as per the suitability of the borrower and NCD subscribers. Typically, the interest payment is on monthly basis whereas the principal repayment can be on monthly, quarterly, half yearly, yearly or bullet payment basis. It is issued for a period of 12 months to 60 months.
Corporates priced their NCDs based on the size and credit rating. Below is the table displaying the pricing of NCDs based on their credit rating from the Big 4 of rating agency in India.
| Credit Rating | % Coupon / Interest Rate |
| AAA | 7.90% to 8.25% |
| AA | 8% to 9% |
| A | 9% to 11% |
| BBB+ & BBB | 11% to 14% |
| BBB- | 14% to 16% |
- Commercial Papers: These are short term debt instruments primarily issued by high rated corporates. Typically, the tenure is 7 days to 12 months carrying the interest rate of 7.75% to 9.5% based on the tenure, credit rating, and requirements of the issuer.
- Bonds: These are long term debt instruments issued by corporates to meet their capex, acquisition, and working capital requirements. The bonds can be secured & unsecured and convertible to shares or not.
Bonds can be structured as per the suitability of the borrower and Bonds investors. Typically, the interest payment is on monthly basis whereas the principal repayment can be on monthly, quarterly, half yearly, yearly or bullet payment basis. Generally, the tenure for bonds are 24 months to 60 months carrying a interest rate of 8% to 10% based on the credit rating.
