Grip to launch 'Investment Grade rated Corporate Bonds' — How will it benefit you?

Grip, a multi-asset alternative investment platform, has announced an opportunity for retail investors to invest in 'Investment Grade rated Corporate Bonds'. Investment in these can done with as low as Rs 10,000, Grip said in a statement.

"These bonds will offers 8-11 percent pre-tax yield to maturity (YTM) over a tenure of 12-36 months," the company said.

These corporate bonds will be held in demat form and listed on the stock exchanges to enable secondary trading.

The corporate issuer issues such bonds for the purpose of accessing the debt market. Retail participation in the bond market is very low and this market is dominated by institutional investors.

"By launching selected 'A' rated bonds on our platform, we are making investing in bonds accessible and easy to execute. In the current environment where fixed deposit returns are lower than the inflation rate, such secured and highly rated bonds are offering an attractive risk-reward for investors to diversify their fixed income portfolio," said Nikhil Aggarwal, Founder & CEO at Grip.

Individuals will have to do their online KYC and add their demat details on the platform. Post payment, the bonds will be directly transferred to the users account on a T+2 basis, Aggarwal told CNBC-TV18.com.

These bonds will currently be trading between 7 to 11 percent. This is 200-400 bps higher than the FD that banks offer or 70-100 percent higher than FD returns, Aggarwal said.

"Typical tenure for bonds that we are looking at is between 13 to 36 months. The bonds also can provide liquidity to investors as these are publicly traded albeit at lower daily average volumes," he added.

According to Aggarwal, it is a good time to invest in bonds because of two reasons.

"First, the current environment where fixed deposit returns are lower than the inflation rate, such secured and highly rated bonds are offering an attractive risk-reward for investors to diversify their fixed income portfolio. Secondly, bond prices and interest rates have an inverse relationship. The price of bonds goes up when interest rates decline and vice versa. Over the last 6 months, interest rates across the globe have seen sharp hikes as central banks are trying to curb inflation. These higher interest rates have resulted in bond prices reducing and yields to be earned by investors increasing. It is hence a good time to start building a bond portfolio and lock in higher yields," he explained.