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List of Senior Secured Bonds

Senior secured bonds are bonds that get priority rights of receiving payments over subordinated bonds and loans, unsecured bonds and equity investors in case of default by the Issuer. Also, such bonds are backed by some sort of collateral like property, receivables, etc. which can be used to recover money in case of default by the Issuer. Senior secured bonds are one of the investment options available for investors in India who want to diversify their portfolio but want to minimise the risk.

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NameIssue SizeMaturityCoupon
Tata Sons Private LimitedCRISIL AAAINE895D07446300.00Cr20 Mar 20249.90 %
LIC Housing Finance LimitedCRISIL AAAINE115A07FC01000.00Cr19 Mar 20249.80 %
Tata Sons Private LimitedCRISIL AAAINE895D07396305.00Cr13 Jan 20249.74 %
Tata Sons Private LimitedCRISIL AAAINE895D07370237.00Cr13 Dec 20239.71 %
India Infradebt LimitedCRISIL AAAINE537P07026165.00Cr28 May 20249.70 %
L&T Infra Credit LimitedCRISIL AAAINE235P0703595.00Cr10 Jun 20249.70 %
Kudgi Transmission LimitedCRISIL AAAINE945S0723190.00Cr25 Apr 20389.50 %
Housing Development Finance Corporation LtdCRISIL AAAINE001A07MX4500.00Cr13 Aug 20249.50 %
Kudgi Transmission LimitedCRISIL AAAINE945S0732296.00Cr25 Apr 20399.50 %
Kudgi Transmission LimitedCRISIL AAAINE945S07330104.00Cr25 Apr 20409.50 %

Who issues Senior Secured Bonds?

Typically, big corporations in India issue these bonds to source funds from the market. Non-Banking Financial Companies (NBFCs) also issue senior secured bonds to avail borrowings from the public as these are a nice way to get funds apart from mainstream lenders such as Banks. NBFCs are one of the major issuers of bonds in the Indian debt capital market.

How do Senior Secured Bonds work?

The bonds are one of the debt instruments by which the issuer company raises money from the public and pays interest/ coupon amount to the investor. They issue the bond for a specific tenure and then by the maturity of the bond, pay the principal back.
Senior secured bonds are superior when compared to unsecured bonds and subordinated bonds. Hence, at the time of liquidation, these bondholders will get priority in getting the payment. 
The issuer pays interest and principal based on the terms and conditions of the bond, which is agreed by the issuer at the time of issuance only. It can be monthly, quarterly, semi-annually or annually as per the agreement.

What are the features of Senior Secured Bonds

  • Senior secured bonds are a safer option than most bonds. 
  • These secured bonds will be backed by some kind of collateral or the company's assets, such as property, inventory, receivables, etc.
  • At the time of liquidation, the bondholder of the senior secured bond will get priority over other investment holders.
  • Credit rating agencies rate these bonds. So, it becomes easier for the investor to choose the investment option considering the rating assigned by the rating agency. 
  • Investment in these bonds can be done from Rs 1000, and the minimum investment amount can range from Rs 10,000 to Rs 1 Lakh based on the terms of such issuance.

Advantages of Senior Secured Bonds

  • Senior secured bonds are a safer option as they are backed by collateral.
  • These bonds are safer than equity investments as these have fixed coupon payments on the agreed date. 
  • As these bonds usually have an amortisation structure, hence provide regular/periodic income to the investor and are good for people looking for a recurring source of income.
  • These bonds are good for people who want to diversify their portfolio with moderate risk.

Disadvantages of Senior Secured Bonds

  • These bonds are not easily transferable/ redeemable hence they have low liquidity making them less lucrative in case of any sudden need for funds.
  • There will always be credit risk involved with the bonds. If the issuer fails to maintain the quality of the loan hypothecated, there is a chance that they will make a default also in making timely payments. 
  • The risk is lesser in senior secured bonds, so that the return will be slightly lower than in unsecured investment options.

How to calculate the yield of Senior Secured Bonds

Yield is the return on the capital the investor has invested in the bond. The yield and price of the bond are inversely related to each other, i.e. with the rise in the bond's price, the yield will go down and vice versa. 
To know the actual return earned on a bond, we need to calculate the XIRR, i.e. Extended Internal Rate of Return of the bond.

 

What is XIRR?
An extended Internal Rate of Return is a rate of return that gives the actual or current value of the total amount invested. It gives the average annual rate of return that an investment can generate over a period of time.

Let's understand this by an example,
Purchase price of senior secured bond on 1 Jan 23: ₹ 20,000/-
The coupon rate is 8%
Semi-annual coupon payment
The bond will mature in 4 years

Coupon Payments will be
Year 1

  1. 800
  2. 800

Year 2

  1. 800
  2. 800

Year 3

  1. 800
  2. 800

Year 4

  1. 800
  2. (20,000+800)

Calculation of XIRR= XIRR(B1:B9,A1:A9)*100

S.NoDate (A)Cash Flow(B)
101/01/23(20,000)
201/07/23800
301/01/24800
401/07/24800
501/01/25800
601/07/25800
701/01/26800
801/07/26800
901/01/2720,800
 XIRR8.15%

(Note: This is calculated using excel sheet, if you put this formula in excel sheet then the result would be same)

Who should invest in Senior Secured Bonds

Investors looking for exposure to the market can consider investing in senior secured bonds. This is because such bonds offer stability and income, which are two key factors to look for when making an investment decision. Also, Investors who are looking for an alternative to traditional fixed-income instruments can also consider senior secured bonds. This is because such bonds offer higher interest rates than government bonds and fixed deposits and are less risky than equity investments and unsecured bonds.

Finally, investors who want to diversify their portfolios can also consider investing in such bonds.

FAQs about Senior Secured Bonds

Is a senior-secured bond safe?

Senior secured bonds are a comparatively safer option to invest in. At the time of any default or liquidation, investors of senior secured debt will be prioritised over unsecured debt and equity

How to buy Senior secured bonds in India?

Investors can buy the senior secured bond by using their demat account by either subscribing to primary issue of bonds or purchasing the bonds in the secondary market. There are also online bond platform providers where investors can register and purchase such bonds.
Disclaimer: The facts and information on this page are for information and awareness purposes only. No information provided here is intended towards any specific user and should not be construed as investment advice or a recommendation of any kind whatsoever. You are requested to consult with your professional investment advisor or tax advisor for specific directions on any investments in any securities including the bonds mentioned on this page before making any investment decision. Wint Wealth shall not be liable for any losses incurred by you based on an investment decision utilising the information on this page.