Amid ongoing geopolitical developments and market volatility triggered by Trump tariffs and the Russia-Ukraine war, bonds continue to remain trusted instruments for investors, helping them to earn stable and predictable returns on their investments.
Furthermore, unlike investments in , bonds are generally less prone to volatility and are suitable for investors who seek capital preservation and passive income. Bonds are fixed-income instruments issued by corporations, and governments to raise funds from investors in the form of debt.
Different types of are primarily categorised into listed and unlisted bonds, each with unique characteristics and features as per the needs and requirements of investors.
What are listed bonds?
are fixed-income, debt securities. They are traded on recognised stock exchanges such as NSE or BSE. They are regulated by the Securities and Exchange Board of India (SEBI). Aspiring investors, after conducting proper due diligence and consulting with a , can consider investing in bonds through demat accounts and online platforms. This helps ensure high liquidity and complete transparency throughout the entire bond issuance process.
The respective issuers are mandated to regularly disclose their financial statements, balance sheet details, objectives of the bond, and other related information, enabling prospective investors to make informed decisions with up-to-date and accurate information.
What are unlisted bonds?
Unlike listed bonds, unlisted bonds are not registered or traded on any public exchanges. They are purchased and sold over the counter, i.e., OTC, generally through intermediaries and brokers. The main objective of issuing unlisted bonds is to primarily raise funds from corporate treasuries, institutions, insurance firms, and high-net-worth individuals.
There are some intermediaries that also offer retail investors the opportunity to invest in such bonds. Furthermore, these securities are subject to a lighter and less stringent regulatory framework, with lower disclosure norms and rules compared to listed bonds, and carry higher liquidity and . Unlisted bonds are subject to SEBI’s broader issue regulations, wherever relevant, but are not under the comprehensive listing rules.
Listed vs unlisted bonds: Quick comparison
Note: The above comparison table, features, and taxation rates are illustrative in nature and should not be considered exhaustive or personalised financial advice. For complete and updated details, refer to the official website of your respective bond-issuing institution.
Bottom line
Listed bonds offer investors higher liquidity, clarity, transparency, and regulatory protection. These features make regulated bonds more suitable for most retail investors aspiring to build .
Unlisted bonds, on the other hand, may offer investors a higher yield and easier terms, but they still carry greater risks, including capital depreciation, loss of funds, lower liquidity, and weaker or vague disclosure standards, compared to listed bonds.
Therefore, aspiring investors should carefully consider and evaluate their investment objectives, long-term wealth creation targets and risk appetite before choosing between listed and unlisted bonds. Any decision in this regard should be made only after proper due diligence and consultation with a certified financial advisor.
Disclaimer: Investments in bonds and other debt securities are subject to market risks, including possible delays or defaults in payment. The information provided above is for educational purposes only and should not be considered financial or investment advice. Investors are advised to read all offer-related documents carefully and consult with a financial advisor before making any investment decisions.