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Bonds
22

Thanks… So let say for eg: We found NHAI bond paying 9.5% yield maturing in 2026.
You go and buy on exchange, and get the units credited in account. How you identify that the next coupon which is due hypothetically in Dec 2020 and you bought today. Will you be eligible to get the coupon or the person who sold is still entitled to receive coupon for Dec 2020? .

23

Price includes accrued interest, so if you buy today for december coupon then you will get full coupon to your bank account, what ever seller is entitled till now is added in price already.

24

ok… Do you have any guidebook on this for more deep understanding?

Many Thanks !

25

You can start from varsity here if you are a beginner, soon much more related to bonds will be added.

26

Thanks for the link provided.

As such not a beginner, I am invested in NHAI & NABARD in 2016. However I never traded in secondary market. So am in process of learning from you & this forum.

Had 1 more query…
Your primary objective to invest in secondary market is to gain on HIGHEST YIELDS only? or something else.

27

usually yield. Also primary issues don’t happen all the time, while secondary can be traded any day.

Think of it like equity IPO - primary issue is IPO, daily trading is essentially secondary market.

28

Thanks…

I had gone through the varsity link you provided. Got a clear understanding.

Need quick understanding on this…

let’s say, hypothetically, if a security coupon is due in Dec 2020 and maturity is also Dec 2020
One is eligible to receive that coupon, right?

And also do you have any site, where we can see upcoming offerings in NCDs & Corporate Bonds.

Once again many thanks.

29

Yes, you will receive coupon plus maturity payment on that same day.

You can google, should able to find one site.

1 Like
30

ICICI Direct website also provides a list of various secondary market Bonds available but I am newbie so haven’t researched/invested yet…

I have 1 very basic Question… If I buy a Zero Coupon cumulative interest Bond that were issued 9 years ago at Rs 5000, and right now are trading at around 9000 and stated maturity is at around 11000 in 1.5 years… So ignoring any credit default, theoretically, I can buy it now and hold in my Demat account till maturity…

So at maturity, I will earn the 2000 difference in current & maturity price and the final proceeds will automatically get credited in my Saving Account linked to my Demat… No other Paper work required?

I am trying to understand the concept of secondary market Bonds buying and selling so would appreciate if you can confirm if my understanding is correct or flawed :slight_smile:

1 Like
31

Yes, correct… you can sell anytime in secondary market as and when you see price difference to your buying…

Also Note : Not necessary the bond price will keep rising till maturity. Understand the correlation in Bond Market between Price & yields of the bond. Details below.

  1. There is an inverse relationship between Yields & the price of the Bond.
  2. When Yields rise, bond price fall and vice versa.
  3. Yields rise/fall due to one of the major & imp event i.e RBI monetary policy (occurs every 60 days) and other geopolitical factors too
  4. So when RBI reduces int rates (meaning reduction in REPO RATES), bond prices will increase and Yields will fall and vice versa.

Thanks

1 Like
32

Thanks!! My Main Question is about Buying and Holding till Maturity… Can you answer in that context please :slight_smile:

33

Try out seller price basis yields on this page : https://juicybonds.tejassu.com/tick.html

1 Like
34

Yes, if there is no credit default and you can hold till maturity the company will credit the amount to your account. No paperwork required for bonds held in demat mode.

Market-price is relevant only to trade in the secondary market.

2 Likes
35

this is awesome

37

You can also check @bondsindia to buy or sell bonds online nowadays. You can visit their website - https://www.bondsindia.com for better approach.