The information provided are for general consumption only. Do not construe this as an offer/advice/research to buy/sell any securities

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Secured Bonds

Secured Bonds are backed or secured by specific tangible assets that belong to the bond issuer. In case of default in repayments by the bond issuer, the bond investors, via a trustee, can sell the tangible assets that secure the bonds and recover their investments.

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Showing list of 10,604 bonds

Bond name

Rating

Coupon Rate

Payment Freq

Maturity Date

Acuite
A-
11.20%Quarterly30 Jun 24
CRISIL
AAA
7.05%Annually20 Feb 23
Unrated
NIFTY 50 INDEX LINKEDon Maturity18 Jun 27
Unrated
NIFTY 50 INDEX LINKEDon Maturity28 Sep 25
Unrated
NIFTY 50 INDEX LINKEDon Maturity19 Jul 23
Unrated
16% XIRRQuarterly04 Feb 25
CRISIL
AAA
5.75%Annually30 Apr 25
CRISIL
AAA
8.55%Annually28 Jan 30
Unrated
12.50%Quarterly08 Oct 23
INDIA
AAA
8.85%Annually02 Nov 27
Unrated
NIFTY 50 INDEX LINKEDon Maturity10 Jun 26
Unrated
11.60%Annually12 Jul 22
Unrated
16.50%Monthly09 Mar 20
CRISIL
AAA
9.25%Annually19 Dec 28
Unrated
NIFTY 50 INDEX LINKEDon Maturity14 Jun 27
ICRA
PP-MLD BBB+
10 YR GSEC LINKEDon Maturity15 Jan 23
CARE
BBB-(CE)
0.40%Annually15 Oct 30
INDIA
D
8.50%Semi Annually14 Apr 26
INDIA
A-
0%Never19 Aug 23
CRISIL
AAA
9%Semi Annually30 Sep 26
1-20 out of 10,604

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Secured bonds in India

Secured bonds are bonds backed by a specific asset(s) owned by the bond issuer. The asset is a recourse for the bond investors in the event of default by the bond issuer. 


For example - A company may issue Bonds backed by one of their factories. In case of issuer bankruptcy or default, investors can sell the factory that secured the bond to recover their money. The trustee of the bond (appointed during the bond issue) does the recovery on behalf of the bond holders.


What are senior secured bonds?

Every company has a capital structure for their debt. Seniority of debt decides which debt of the company gets paid first. 


Senior secured is the most senior debt of any company and senior secured bondholders get paid first. Hence, it is considered to be the safest debt of any company. Further, in case of bankruptcy of the issuer, the senior secured bond holders are paid first after the issuer's assets have been sold off by the trustee.


Junior and subordinate are the other and lower seniorities of the capital structure. 


What is the difference between secured and unsecured bonds?



Secured bonds

Unsecured bonds

Security

Backed by specific assets owned by the issuer

Not backed by any tangible asset, just faith in issuer

Who can issue?

Private sector companies and PSUs. Only corporate bonds can be secured

Government bonds are always unsecured. Companies may also issue unsecured bonds

Safety

Safer than unsecured bonds because bondholders can sell the asset to recover their money

Riskier than secured bonds (exception - government bonds)


Are secured bonds risk free?

No, secured bonds are not completely risk free. However, they have a lower risk than Unsecured Bondss.


Issuers of secured bonds

Only corporations or companies (both private sector and PSUs) issue secured bonds.


Government Bonds are always unsecured because of their sovereign credit rating and investor confidence.


Examples of Secured Bonds



Issued by private sector company

Issued by PSU

Bond ISIN

INE197P07052 [link]

INE752E07OC4 [link]

Bond issuer

A. K. CAPITAL FINANCE LTD

POWER GRID CORPORATION OF INDIA LTD

Interest rate

9.60%

7.36%

Maturity date

09-03-2024

18-10-2026


Who should invest in secured bonds?

Investors who value safety in investing should consider buying secured bonds. Secured bonds can help investors to protect their capital and generate stable and regular income.


Risks of investing in secured bonds

The biggest risk of investing in a secured bond is when the issuer defaults and the value of the collateral backing the bond falls below the market value. In such cases, investors will probably recover only a fraction of their investments.


Apart from this, secured bonds are subject to risks related to interest rate, reinvestment of coupon, liquidity and credit default. Holding a secured bond until maturity will help you eliminate interest rate and liquidity risks.


Advantages of investing in secured bonds

The biggest advantage of investing in secured bonds is that added safety due to the presence of collateral. In case of default or bankruptcy, investors are aided by the trustee of the bond and they can fully recover their money.


Capital protection and regular interest payments are some more advantages of investing in secured bonds.


Best Secured Bonds in India

Identifying the best secured bonds for you requires some filtering.


First, you need to decide what credit rating you are comfortable with. If you are an ultra low risk investor, it is better to stick to AAA secured bonds. If you can handle some risk, investing in AA or A secured bonds can be more rewarding to you than AAA secured bonds.


Next, you need to sort the secured bonds in descending order of yield to identify highest yield secured bonds.


Finally, you need to make sure that the maturity date of the shortlisted secured bond is in line with your investment timeframe. This will reduce your chance of selling the bond prematurely. Holding secured bonds until maturity eliminates risks associated with interest rate and liquidity.

Still got questions? We’re here to help.

Government bonds are backed by the faith in the ability of the government to pay back which it can do by simply printing more money. Hence, government bonds are never secured.
Secured bonds may or may not be AAA-rated. It depends on the credit rating agency’s assessment of the issuer’s financial strength.
The value of the collateral backing secured bonds must be at least as much as the amount of secured bonds they are selling. For example: If a company is issuing 50 crore worth of secured bonds, the collateral backing them should have a market value of at least 50 crore or higher.
People

Invest in safer portfolio without compromising returns.

Dezerv Debt PMS strategy designed by our investment experts

Learn more

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