Affluent investors are lapping up perpetual bonds of lenders and non-banking finance companies where they can earn 1-3 per cent over traditional bank deposits. Perpetual bonds have found takers among a section of the rich investors because the product fetches a better return than the fixed deposit of these banks.Punjab National Bank, IndusInd Bank and Yes Bank, whose perpetual bonds are fetching 10-14 per cent, are the most popular among investors with a higher risk appetite. Among NBFCs, yields on Cholamandalam bonds are at 10.6 per cent.Wealth managers believe investors would be better off buying perpetual bonds of nationalised banks. “Investors should prefer nationalised bank perpetual bonds backed by the government,” says Vikram Dalal, managing director, Synergee Capital. In India, perpetual bond issuers fix a call option, which could be activated after five or 10 years, giving investors an exit.

Source: Economic Times July 04, 2019 02:31 UTC