Invest in Corporate Bonds with Up to 13.25% Returns: Complete Guide for Investors
Corporate bonds have become one of the fastest-growing investment options for investors looking to earn higher fixed returns than traditional Fixed Deposits (FDs). Today, several companies offer corporate bonds with yields reaching up to 13.25% annually, making them attractive for investors seeking regular income.
However, investors should understand that while highly rated corporate bonds generally have relatively low credit risk, no investment is completely risk-free. The safety of your investment depends on factors such as the issuer’s financial strength, credit rating, security structure, and market conditions.
This guide explains everything you need to know before investing in corporate bonds.
What is a Corporate Bond?
A corporate bond is a debt instrument issued by a company to raise money from investors.
Instead of borrowing from banks, companies borrow directly from the public. Investors lend money to the company for a fixed period, and in return, the company agrees to:
Pay a fixed rate of interest (coupon)
Return the principal amount on maturity
Make payments monthly, quarterly, annually, or at maturity depending on bond terms
In simple words, buying a corporate bond means lending money to a company.
Why Investors are Choosing Corporate Bonds
Corporate bonds offer several advantages over traditional savings options. They generally provide:
Higher returns than Fixed Deposits
Predictable fixed income
Regular cash flow
Flexible investment tenure
Better diversification
Lower volatility than equities
Many quality corporate bonds currently offer returns ranging between 8% and 13.25%, depending on the issuer’s credit quality, tenure, and market conditions.
Can Corporate Bonds Really Offer 13.25% Returns?
Yes. Certain companies issue bonds with yields up to approximately 13.25%. However, investors should understand an important principle:
Higher returns generally come with higher credit risk.
AAA-rated companies usually offer lower yields because they have stronger credit profiles. Bonds offering 12–13.25% returns may belong to issuers with lower credit ratings or higher business risk.
Therefore, investors should never choose a bond solely because it offers the highest interest rate.
How to Invest in Corporate Bonds
Investing has become easier through online bond platforms, banks, brokers and stock exchanges. Before investing, follow these important steps.
1. Check the Credit Rating
Always verify the credit rating assigned by recognized agencies such as:
CRISIL
ICRA
CARE Ratings
India Ratings
Generally:
AAA indicates the highest credit quality.
AA represents very good credit quality.
A indicates adequate safety but requires closer evaluation.
BBB and below involve progressively higher credit risk.
Never invest without understanding the credit rating.
2. Choose Secured Bonds Whenever Possible
Corporate bonds are broadly classified into:
Secured Bonds
These are backed by company assets.
If the company defaults, investors may have a better chance of recovery through the secured assets, subject to insolvency laws.
Unsecured Bonds
These have no asset backing.
They often offer higher returns but involve greater risk if the issuer faces financial difficulties.
3. Check Whether the Bond is Listed
Listed bonds are traded on stock exchanges.
Advantages include:
Easier buying and selling
Better liquidity
Greater price transparency
Unlisted bonds may be more difficult to sell before maturity.
4. Study the Company’s Financial Health
Before investing, examine:
Revenue growth
Profitability
Debt-to-equity ratio
Interest coverage ratio
Cash flow
Business outlook
A financially healthy company is generally more likely to meet its repayment obligations.
5. Understand Yield to Maturity (YTM)
Yield to Maturity (YTM) represents the estimated total return if the bond is held until maturity, considering purchase price, coupon payments, and redemption value.
YTM is often more informative than simply looking at the coupon rate.
Advantages of Corporate Bonds
Higher Fixed Returns
Corporate bonds generally offer higher returns than many traditional bank deposits.
Regular Income
Investors can receive predictable monthly, quarterly, semi-annual or annual interest payments.
Lower Volatility
Unlike stocks, bond prices are generally less volatile, although market values can fluctuate with interest rates and credit conditions.
Portfolio Diversification
Corporate bonds help diversify an investment portfolio alongside equities, mutual funds and other assets.
Capital Preservation Potential
High-quality investment-grade bonds are often used by conservative investors seeking relatively stable income, though capital is not guaranteed.
Risks of Investing in Corporate Bonds
Every investment involves risk.
Important risks include:
Credit Risk
The issuing company may fail to pay interest or principal.
Interest Rate Risk
Bond prices may decline if market interest rates rise.
Liquidity Risk
Some bonds may be difficult to sell quickly without affecting the price.
Inflation Risk
Inflation can reduce the purchasing power of fixed interest income.
Reinvestment Risk
Future interest payments may need to be reinvested at lower rates.
How to Build Wealth Using Corporate Bonds
Many investors use corporate bonds for regular income while reinvesting the interest into:
Equity Mutual Funds
Index Funds
Hybrid Funds
Additional bonds
Fixed income instruments
This approach can help increase long-term wealth through disciplined reinvestment.
Taxation of Corporate Bonds
Interest earned from corporate bonds is generally taxable according to the investor’s applicable income tax rules.
If bonds are sold before maturity, capital gains tax treatment depends on factors such as whether the bond is listed or unlisted and the applicable tax laws in force at the time of sale.
Investors should consult a qualified tax adviser for advice specific to their circumstances.
Who Should Invest in Corporate Bonds?
Corporate bonds may suit:
Retired individuals seeking regular income
Conservative investors
Investors looking to diversify beyond equity
Those wanting potentially higher fixed-income returns than traditional deposits
Long-term investors willing to assess issuer risk carefully
Important Tips Before Investing
Never invest based solely on attractive interest rates.
Always:
Verify the credit rating.
Understand whether the bond is secured or unsecured.
Read the offer document carefully.
Assess the issuer’s financial health.
Diversify across issuers rather than concentrating investments.
Match the bond’s tenure with your financial goals.
Consider consulting a SEBI-registered investment adviser if unsure.
Below is a comprehensive, structured table of the corporate bonds you provided, sorted from highest to lowest yield.
| Sl. No. | Company / Issuer | Credit Rating | Rating Agency | Yield (Up to) | Interest Payment | Tenure / Maturity |
|---|---|---|---|---|---|---|
| 1 | Akara Capital | BBB | ICRA | 13.70% | Monthly | 6–22 Months |
| 2 | Keertana Finserv | BBB+ | India Ratings | 13.50% | Monthly | 10–22 Months |
| 3 | NeoGrowth Credit | BBB | ICRA | 13.25% | Quarterly | Maturity: 18-Dec-2027 |
| 4 | Tapir Constructions | A- | IVR | 12.80% | Monthly | Maturity: 12-Mar-2030 |
| 5 | Spandana Sphoorty | BBB+ | ICRA | 12.70% | Monthly | 10–22 Months |
| 6 | Midland Microfin | A- | Acuité | 12.50% | Monthly | 10–23 Months |
| 7 | Lucina Development | A- | IVR | 12.50% | Monthly | Maturity: 30-Jan-2029 |
| 8 | Mahaveer Finance | BBB+ | CARE | 12.05% | Quarterly | 11–41 Months |
| 9 | Finkurve Financial | BBB+ | CARE | 11.95% | Quarterly | 9–24 Months |
| 10 | Unigold Finance | BBB | CRISIL | 11.89% | Monthly | 8–21 Months |
| 11 | Indel Money | A- | India Ratings | 11.79% | Monthly | 9–34 Months |
| 12 | Arman Financial | A- | Acuité | 11.74% | Quarterly | 7–25 Months |
| 13 | Namra Finance | A- | Acuité | 11.49% | Quarterly | 8–26 Months |
| 14 | Muthoot MCred | A | ICRA | 11.05% | Monthly | 10–26 Months |
| 15 | EarlySalary (Fibe) | A- | CARE | 11.02% | Quarterly | Maturity: 4-Jul-2028 |
| 16 | Kosamattam Finance | A | India Ratings | 11.02% | Monthly | 10–35 Months |
| 17 | Navi Finserv | A | CRISIL | 11.00% | Monthly | Maturity: 31-Aug-2029 |
| 18 | IIFL Samasta | AA- | CRISIL | 10.64% | Quarterly | 8–26 Months |
| 19 | Muthoot Fincorp | AA- | CRISIL | 10.50% | Monthly | Maturity: 30-Dec-2033 |
| 20 | UGRO Capital | A+ | India Ratings | 10.48% | Monthly | Maturity: 16-Jun-2029 |
| 21 | Muthoot Fincorp Ltd | AA | CRISIL | 9.25% | Cumulative | 72 Months |
| 22 | Muthoot Fincorp Ltd | AA | CRISIL | 9.24% | Yearly | 72 Months |
| 23 | Muthoot Fincorp Ltd | AA | CRISIL | 9.24% | Monthly | 72 Months |
| 24 | Muthoot Fincorp Ltd | AA | CRISIL | 9.15% | Cumulative | 60 Months |
| 25 | Muthoot Fincorp Ltd | AA | CRISIL | 9.15% | Monthly | 60 Months |
| 26 | Kerala Infrastructure | AA | India Ratings | 9.15% | Quarterly | Maturity: 21-Jan-2033 |
| 27 | Muthoot Fincorp Ltd | AA | CRISIL | 9.14% | Yearly | 60 Months |
| 28 | Muthoot Fincorp Ltd | AA | CRISIL | 9.00% | Cumulative | 36 Months |
| 29 | Muthoot Fincorp Ltd | AA | CRISIL | 8.99% | Yearly | 36 Months |
| 30 | Muthoot Fincorp Ltd | AA | CRISIL | 8.99% | Monthly | 36 Months |
| 31 | Muthoot Fincorp Ltd | AA | CRISIL | 8.85% | Cumulative | 24 Months |
| 32 | Muthoot Fincorp Ltd | AA | CRISIL | 8.84% | Yearly | 24 Months |
| 33 | Muthoot Fincorp Ltd | AA | CRISIL | 8.84% | Monthly | 24 Months |
| 34 | Andhra Pradesh State Beverages Corporation | AA | India Ratings | 8.79% | Quarterly | Maturity: 28-Nov-2031 |
| 35 | Tata Capital | AAA | CRISIL | 7.40% | Yearly | Maturity: 29-Apr-2032 |
| 36 | Bajaj Finance | AAA | CRISIL | 6.95% | Yearly | Maturity: 2-Dec-2031 |
| 37 | HDFC Bank | AAA | CRISIL | 6.85% | Yearly | Maturity: 1-Dec-2031 |
| 38 | Power Finance Corporation (PFC) | AAA | CRISIL | 6.85% | Yearly | Maturity: 14-Apr-2032 |
| 39 | Indian Railway Finance Corporation (IRFC) | AAA | CRISIL | 6.70% | Yearly | Maturity: 31-Aug-2031 |
Credit Rating Risk Guide
| Rating | Risk Level | Suitable For |
|---|---|---|
| AAA | Highest Safety | Conservative investors |
| AA+ / AA / AA- | Very High Safety | Long-term income investors |
| A+ / A / A- | Good Safety | Moderate-risk investors |
| BBB+ / BBB | Medium Safety | High-yield investors willing to accept higher credit risk |
Highest Yielding Bonds (Above 12%)
| Company | Yield | Rating |
|---|---|---|
| Akara Capital | 13.70% | BBB |
| Keertana Finserv | 13.50% | BBB+ |
| NeoGrowth Credit | 13.25% | BBB |
| Tapir Constructions | 12.80% | A- |
| Spandana Sphoorty | 12.70% | BBB+ |
| Midland Microfin | 12.50% | A- |
| Lucina Development | 12.50% | A- |
| Mahaveer Finance | 12.05% | BBB+ |
Important Note: Higher yields generally indicate higher credit risk. Before investing, assess the issuer’s financial health, review the bond’s credit rating and outlook, understand liquidity and redemption terms, and diversify across issuers rather than concentrating investments in a single high-yield bond.
Final Thoughts
Corporate bonds can be an effective component of a diversified investment portfolio, offering predictable income and potentially higher returns than traditional fixed-income products. While some bonds may offer yields of up to 13.25%, investors should remember that higher yields generally reflect higher levels of risk.
There is no corporate bond with “almost zero risk” or guaranteed safety. Choosing investment-grade issuers, understanding credit ratings, evaluating the company’s financial position, and diversifying investments are essential steps to managing risk effectively.
With careful research and disciplined investing, corporate bonds can provide a steady income stream while helping investors pursue their long-term financial goals.
Frequently Asked Questions (FAQs)
Are corporate bonds safer than stocks?
Generally, investment-grade corporate bonds tend to be less volatile than stocks and usually have a higher claim on company assets in the event of liquidation. However, they still carry credit and market risks.
Can I lose money in corporate bonds?
Yes. Investors can lose money if the issuer defaults, if bond prices fall and the bond is sold before maturity, or in certain insolvency situations.
What credit rating is considered safest?
AAA-rated bonds are generally regarded as having the strongest credit quality among corporate bonds.
Are corporate bonds better than Fixed Deposits?
Corporate bonds may offer higher returns than bank FDs, but they also carry credit risk. Bank FDs are subject to different protections and risks.
Can I sell my corporate bond before maturity?
If the bond is listed and there is sufficient market liquidity, it may be possible to sell it before maturity at the prevailing market price.
Is investing in a 13.25% corporate bond always a good idea?
Not necessarily. Higher yields often indicate higher risk. Investors should evaluate the issuer’s financial strength, credit rating, security structure, and investment objectives before investing.