India Infoline (IIFL) Bond
POSTED BY ON September 5, 2012 12:26 pm COMMENTS (6)
Dear Members,
I have recieved an email from IIFL about investing in IIFL Bond.
I have never invested in Bonds. Need your guidance. Is this a safe & risk free instrument.
Checklist that one needs to evaluate these type of products.
Below is a screen capture of the mail.
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12.75*
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| 6 Year IIFL Bonds Un-Secured, Redeemable, Non-Convertible Debentures |
 10,625 interest per month on 10 Lakhs invested |
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Key Features
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Monthly option yield @ 13.52% p.a
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Monthly, Annual, Cumulative interest options
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Tradable NCDs to be listed on NSE & BSE
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No Tax deduction at Source on interest
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CRISIL “CRISIL AA-/Stable”
ICRA “[ICRA] AA-Stable
Indicates a high degree of safety regarding timely servicing of financial obligations. Such instruments carry very low credit risk.
Dear Jig, yes bank FDs score over these bonds.
Thanks
Ashal
Is this option open for NRIs also?
NRE FD currently gives appx 9 % tax free for appx 7 Yrs.
What is expert suggestion?
bank Fd secure than these kind of Bonds?
Thanks
Why not put money in 5 yea tax saving FD and also save tax on the money invested, this option is better if 80C is still not exhausted !
Dear Krishna Tammireddy, the time frame of these bonds is 6Y. if you are ready to take risk more than these bonds, my personal take ‘ll be to opt for a pure Eq. play via MFs. Even if you manage to earn just 10-11% CAGR, due to tax free status, the net result ‘ll be higher for you.
Thanks
Ashal
Thanks Krishna Kishore for the guidance.
Bonds normally are of two types
1) Secured : Which are backed by some assets.
2) Unsecured : Which are not backed by any assests.
In the case of IIFL its Unsecured debuntures, so there is an amount of risk it carries as during default of the company, unsecured bonds will be settled at last but before premium equity share holders. So there is an amount of risk involved.
But since it rated as AA- by crisil you may consider them as a good option for parking your money.
But make sure that it is not Tax free only No TDS.
So if you are in a tax bracket of 30% the interest you will earn is much lesser than stated 12.75%.