Different types of bond comparision

Bonds
1

Hi,

Can anyone tell the different types of bonds available to trade using coin or kite accounts. also, pls explain main differences between them in a table format, pls include main details such as exit load(w/ duration), expanse ratio, taxation and expected returns in CAGR terms. Thanks.

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Type of Bond Issuer Exit Load (w/ Duration) Expense Ratio Taxation Expected Returns in CAGR Terms
Sovereign Gold Bonds (SGBs) Government of India Nil Nil Tax-free on interest and capital gains 5-7%
Government Securities (G-Secs) Government of India Nil Nil Taxable 6-8%
State Development Loans (SDLs) State Governments Nil Nil Taxable 7-9%
Non-Convertible Debentures (NCDs) Private Companies Up to 3% (w/ 1 year) 0.10-0.20% Taxable 8-10%
Corporate Bonds Private Companies Up to 5% (w/ 3 years) 0.20-0.40% Taxable 10-12%
High-Yield Bonds High-Risk Private Companies Up to 10% (w/ 5 years) 0.50-1.00% Taxable 12-15%

Please note:

  • Exit loads are charges levied by the issuer of the bond when the bond is sold before maturity. The exit load typically decreases with the duration of the bond.
  • Expense ratios are charges levied by the mutual fund or ETF that manages the bond portfolio. The expense ratio typically represents a percentage of the assets under management.
  • Taxation refers to the tax treatment of the interest earned on the bond. Interest on government bonds is tax-free, while interest on corporate bonds is taxable.
  • Expected returns are expressed in compound annual growth rate (CAGR) terms. CAGR represents the average annual return over the investment period.

Key Differences:

  • Sovereign Gold Bonds (SGBs) and Government Securities (G-Secs) are considered to be the safest types of bonds, as they are backed by the full faith and credit of the government.
  • State Development Loans (SDLs) are considered to be less risky than corporate bonds, as they are backed by the taxing power of the issuing state government.
  • Non-Convertible Debentures (NCDs) and corporate bonds are riskier than government or SDLs, as they are backed by the creditworthiness of the issuing company.
  • High-yield bonds are the riskiest type of bond, as they are issued by companies with poor credit ratings.

Disclaimer:

This information is fully given by BARD (Google).
Please consult with a qualified financial advisor before making any investment decisions

1 Like
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Lol. The question itself is like a prompt to AI.