MUMBAI: Investors with a risk appetite could consider investing in some of the non-convertible debentures (NCDs) available in the secondary market, as these could give a return of as much as 10-15 per cent, say wealth managers.
Uncertainty in the non-banking financial segment following the recent developments at the IL&FS Group, Essel Group, Dewan Housing FinanceNSE 4.92 % and the Reliance Group of Anil Ambani, has led to lower appetite for NBFC paper among investors, they say. With ..
Yields on AA-rated NCDs, such as from SREI Infrastructure Finance, have shoot up to 12-21 per cent. NCDs of Indiabulls Commercial Credit yield 13 per cent, while those of ECL Finance yield 12 per cent and JM Financial Credit Solutions 11-14 per cent. The yield on India Infoline Finance’s paper is 12 per cent and Muthoot Finance’s is 10-12 per cent.
“Investors can consider investing a part of their investment into some of these after doing proper due diligence, thereby freezing stable high returns for a long period on company risk that they have chosen to take,” said Deepak Jasani, the head of retail research at HDFC Securities. Debt fund investors, who are shaken by poor returns from debt funds due to defaults, downgrades or yield moves, can also consider this option, he said.
However, they also cautioned about the risk of buying ..
“One must understand that in the current environment, the liquidity tap for NBFC is closing with investors staying away from them. HNIs (high-networth individuals) and investors who understand bond markets and the risk associated with it, could buy some NCDs from the secondary market,” said Vikram Dalal, the managing director at Synergee Capital.
Dalal recommends NCDs of Edelweiss and JM Financial Credit Solutions to such investors. However, for retirees and risk-averse investors who de ..
According to some wealth managers, liquidity in these NCDs was low and could quickly dry up in case of any adverse event and hence investors must assess their risk appetite and invest only a small amount.
“The environment is fluid and any downgrade could lead to drying up of liquidity. Investors must buy with the objective of holding them till maturity,” said Anup Bhaiya, managing director at Money Honey Financial Services.
0 Comments