How to apply for Bond IPO on IndiaBonds

Introduction

Bonds are like the steady hand in your financial journey, providing a reliable stream of revenue and helping to shield your investments from the ups and downs of the market. They’re like your safety net, ensuring that even when other assets in your portfolio are fluctuating, you have something secure to rely on. Just as individuals need money to pursue their goals, whether it’s buying a home or starting a business, companies and governments also require capital to fuel their growth and meet their obligations. One common way they raise these funds is by issuing bonds. So, when you invest in bonds, you’re not just looking out for yourself; you’re also contributing to the bigger picture of nation-building. Now, when it comes to getting your hands on these financial instruments, you might have heard of something called a “bond IPO.” But hold on a moment! That’s not quite right. The correct term is “public issuance of bonds.” You see, an An IPO (Initial Public Offering) involves companies offering their shares to the public for the first time. In contrast, a bond public issuance occurs when bonds are made available for purchase by investors. This can happen multiple times, not just on the initial occasion. It’s a way for bond issuers to raise funds for various purposes, like funding new projects or managing existing debt. So, if you’re interested in participating in a bond public issuance, you might be wondering how to apply for an ipo online. Well, let me walk you through the process of applying for a bond IPO on IndiaBonds.

Benefits of Bond IPO for Investors

• Investments in Bond IPOs can commence with as little as INR 10,000.
  
• Bond IPOs facilitate the channeling of your savings and the maximization of your earnings by offering higher returns compared to Fixed Deposits.
  
• Investors typically stand to benefit from buying bond IPOs, as companies often provide higher interest rates to individual investors than to institutional investors.
  
• Regulated by SEBI, companies are legally obligated to adhere to a strict issuance process while maintaining a higher degree of transparency.
  
• Investing in bond public issues eliminates price discovery. Since Bond IPOs have uniform pricing, the pricing is transparent for all categories of investors.
  
• These bonds must be listed on exchanges such as NSE or BSE, providing investors with regular updates on the company’s performance and enabling better portfolio monitoring.
  
• Public issues are consistently in high demand and exhibit greater liquidity, offering an easy exit for investors.

How to apply for Bond IPO on IndiaBonds

Step 1: To access the latest public issues, log on to IndiaBonds.com and click on ‘Products’ and click ‘Public Issue’.

Step 2: Select the Bond Public Issue of your choice. You can download the product note and the offer document and get a detailed information on the issue and the issuer.

Step 3: Select investor type & investor category.

Step 4: Select series you want to invest in and add how much you want to invest. The minimum amount for investing in a bond public issue is Rs. 10,000.

Step 5: Add your Personal Details.

Step 6: Preview, Confirm and Submit your form.

Step 7: Make payments online via UPI (up to INR 5 Lakhs) or ASBA (More than INR 5 Lakhs).

If you have applied via UPI, approve the UPI mandate within 48 hours to transfer your funds. For ASBA application, print your application form, add your signature and submit the form to the nearest designated center. The bonds will be credited to your demat account post allotment. Bond public issuances are on first come first serve basis, hence apply as early as possible.

Documents needed to apply for an IPO?

• PAN Card Number
• Demat Account Details
• Address Details
• Bank Account Details

Conclusion

In conclusion, investing in bond IPOs presents a compelling opportunity for individuals to secure their financial futures while contributing to the growth of corporations. With the guidance provided on IndiaBonds, the process of participating in bond public issuances becomes accessible and transparent, empowering investors to make informed decisions. While bond IPOs offer attractive benefits such as higher returns and greater transparency, it’s essential for investors to conduct thorough research and consider factors like credit ratings and taxation implications. In current FY 2023-24, Bond Public Issues are already at an all-time high since the 1st ever public issue done by Tata Capital in February 2009. As per SEBI data, as on Jan’24 there have been a record breaking 37 Bond public issues done by 23 unique issuers. As India aims for the $5 trillion economy milestone, these IPOs will significantly influence its trajectory. Thus, participating in Debt IPO contributes to the nation’s prosperous future.

FAQs

Q. Is it safe to invest in Bond IPO?

A. While Bonds in general are relatively safer than other volatile investment options like equity, investors are required to study both the issuer and issue prior to investing, with respect to its credit rating and other essential factors Secured Non-Convertible Debentures issues are considered a safer option as they are secured or backed by the issuer’s assets as collaterals. This means that in the unfortunate event of the company is not able to repay its investors, the assets will be disposed off to make the payments. Since Bond holders are considered as creditors, Bond investors will be first in line to receive their due, therefore making Secured NCD Issues a low risk investment option.

Q. What are the tax implications for investing in NCD Public Issue?

A. Interest earned through NCD Public Issue or commonly called as Bond IPO is subject to TDS. However, the interest earned is taxed as per your marginal rate of taxation. Apart from this, capital gains come into picture depending on when you sell your investments. If you hold your investments until maturity, there is no capital gains that is accrued. To understand the detailed effect of taxation, it’s advised to consult your financial advisor or tax consultant prior to investing.

Q. How to exit your NCD Public Issue before maturity?

A. Bond IPOs generally have a maturity period starting 2 years and could extend upto 10 years. Investors have the option to invest in the preferred issue series that have a maturity period and coupon suiting their investment objectives. However, while investors cannot withdraw their investments directly from the issuer, these bonds can be traded in the secondary markets via stock exchanges similar to equity and can be exited prior to maturity.

Q. Can NRIs invest in Bond IPO or Buy NCD Public Issues in India?

A. No. NRIs are not eligible to invest in NCD public Issues.

Disclaimer: Investments in debt securities/ municipal debt securities/ securitised debt instruments are subject to risks including delay and/ or default in payment. Read all the offer related documents carefully.