When companies or government institutions that require funding for their business or public projects want to operate their business transparently on a large scale, they require public support and involvement. Hence, the concept of bonds was born in India.
Since the country opened its borders for foreign investments, the government bond market in the economy is close to the $1 trillion mark. According to Schroders, $170 billion worth of convertible securities will be launched in 2021. They expect that the number would reach a record volume of approximately $165 billion by 2022. The recent insights showed that the convertible bonds touched the $700 billion mark globally in 2020. The inclusion of convertible securities in the growing economy helps private and public institutions fill the funding gaps.
What is a Convertible Bond?
Also known as corporate bonds, these convertible securities are held by the investors with an option to convert them into equity stocks at any point in time. Simply put, you have the right or obligation to convert bonds into equities anytime before the bond maturity expires. Upon conversion, you’ll receive a pre-fixed number of equity shares. There are various types of convertibles in India, namely, vanilla convertible bonds, mandatory convertibles, exchangeable bonds, and reverse convertibles.
Where To Buy Convertible Bonds in India?
If anyone wants to secure their hard-earned savings as well as augment their wealth, convertible securities or bonds can be a good investment option. There are numerous ways you can kickstart your bond investment journey. To ease your quest, below are a few platforms where you can start investing in bonds.
1. Buy Convertible Bonds Online
These days, whether it’s debt or bond market or commodity market or any other market, each of them has its online presence. So, you can buy convertible bonds online with a simple sign-up. Some platforms are insightful and transparent to watch, and provide additional information like research reports, best deals, trending bond news, etc. With this data, you can keep yourself abreast of the happenings in the bond market. If you have thoughts about buying convertible securities online, visit the online bond platform here.
2. Subscribe To Public Issue
Corporate bonds or convertible securities can be purchased at the time of the primary issuance. Irrespective of the type of investor, bonds are available in all lot sizes. In the primary market, the face value of the bond is less compared to the secondary market. As a new issue, you can purchase as many convertible bonds as you want. Mostly prefer buying AAA, AA+, and AA rating bonds because they possess higher safety. Try not to go below the AA rating bonds to avoid risks.
3. Buy Convertible Bonds in Secondary Markets
Investors can buy convertible securities or bonds in the secondary market. The bonds issued in the primary market are sold in the secondary market and relisted again in the exchange to buy them at a certain price. Before you buy them, check the spread your broker is levying.
4. Buy via Indirect Route
You can invest in convertible securities or bonds via ETFs and mutual funds too. They give you extra gains and help you in building your portfolio. Going this route offers you multiple varieties of bonds and other investment products to access.
5. Bond Market Regulatory Agencies
You can also buy bonds at regulatory agencies that operate with a proper set of rules and regulations. Doing so reduces the exposure to any other perils in the market. These regulatory agencies also monitor whether all the trading transactions are going ethically or not.
Summary
Bonds are one of the less risky and safest forms of investment products in the market. Whether you are a small business owner or a salaried employee, there are numerous kinds of convertible bonds that’ll serve your purpose. You can buy bonds in the primary and secondary market, on online bond platforms. Finally, ensure to have a demat and trading account to buy convertible bonds online.
