High Yield Bonds: Earn Higher Returns 14%*

High-Yield Bonds: Earn Higher Returns Up to 14%*

Investors looking for higher returns from fixed-income investments often explore high-yield bonds. These bonds offer the potential to earn higher yields than traditional fixed-income options, including AAA rated bonds, in exchange for taking on a relatively higher level of credit risk.

In India, high-yield bonds available to retail investors can include listed debt instruments rated between A and BBB. Depending on the issuer, credit rating, maturity and market conditions, these bonds may offer indicative yields ranging from 11% to 14% p.a.

At GoldenPi, investors can explore high-yield bond opportunities across different sectors, including infrastructure and real estate-linked companies, gold-loan NBFCs and microfinance institutions.

In this guide, we will explain what high-yield bonds are, how their ratings work, the returns investors can explore, the risks involved and how to invest in them through GoldenPi.

What Are High-Yield Bonds?

High-yield bonds are debt securities that offer relatively higher yields compared to bonds carrying stronger credit ratings, such as AA and AAA.

In simple terms, when a company needs funds for business expansion, lending activities, infrastructure development or other requirements, it can raise money by issuing bonds to investors.

The company issuing the bond is called the issuer. In return for the money invested, the issuer agrees to pay interest at specified intervals and repay the principal amount on maturity, as per the bond's terms.

High-yield bonds are generally issued by companies that carry relatively higher credit risk than highly rated issuers. This is why they may offer higher yields to attract investors.

For this article, GoldenPi uses the term high-yield bonds for listed debt instruments carrying credit ratings from A to BBB.

It is worth noting that the international definition of high-yield bonds generally refers to below-investment-grade debt. The Indian market may use the term more broadly when discussing bonds offering higher yields than traditional high-rated fixed-income instruments.

Types of High-Yield Bonds Available in India

High-yield bonds cover companies operating across different sectors. Their funding requirements, business models and financial positions may differ, which can also influence the yields offered on their bonds.

Some of the key issuer categories include:

Issuer Category

Examples

These are illustrative issuer examples from the high-yield bond universe. The credit rating and yield of each bond must be checked individually, as different instruments from the same issuer may carry different ratings and terms.

1. Infrastructure and Real Estate-Linked Companies

Infrastructure and real estate-linked companies require funds for activities such as project development, construction, land development and business expansion.

Companies such as Lucina Land Development and Tapir Constructions are examples of issuers in this segment.

The returns offered by their bonds can depend on factors such as project progress, cash flows, available assets, debt levels and repayment capacity.

2. Gold-Loan and Other NBFCs

Non-Banking Financial Companies (NBFCs) provide financial services such as gold loans, business loans and other forms of credit.

These companies often raise funds through bonds and Non-Convertible Debentures (NCDs) to support their lending activities and business growth.

Keertana Finserv and Indel Money are examples of NBFC issuers that investors may come across while exploring high-yield bonds.

3. Microfinance Institutions

Microfinance institutions provide small-ticket loans to individuals, small businesses and underserved communities.

These institutions raise funds to support their lending operations and expand their customer base.

Spandana Sphoorty and Midland Microfin are examples of issuers in this segment.

As with any bond investment, investors should review the financial position of the issuer, its repayment record and the latest credit rating before investing.

Indicative Returns on High-Yield Bonds

One of the main reasons investors explore high-yield bonds is their potential to offer higher yields than traditionally high-rated bonds.

The yield available on a bond depends on several factors, including its credit rating, maturity period, purchase price, liquidity and the financial position of the issuer.

Based on the indicative market ranges considered for GoldenPi's high-yield bond category, the yields may look like this:

Credit Rating

Indicative Yield to Maturity (YTM)

These are indicative YTM ranges and not guaranteed returns. Actual yields may vary depending on the bond, purchase price, market conditions and availability on the platform. Yields are subject to change.

What Is Yield to Maturity (YTM)?

Yield to Maturity, commonly known as YTM, is the estimated annualised return an investor may earn if a bond is purchased at its current market price and held until maturity, assuming the issuer makes all scheduled payments.

YTM considers factors such as:

• The bond's purchase price.
• The interest payments received during the holding period.
• The amount payable at maturity.
• The remaining time until maturity.

It is important to understand that YTM and coupon rate are different.

For example, a bond may offer a coupon rate of 12%, but its YTM may be higher or lower depending on the price at which an investor purchases it.

Therefore, investors should compare YTM rather than looking at the coupon rate alone when evaluating different bond opportunities.

Risks Associated with High-Yield Bonds

High-yield bonds offer the potential for higher returns, but they also involve a relatively higher level of risk compared to bonds carrying stronger credit ratings.

The higher yield is the compensation investors receive for accepting additional credit risk. Understanding these risks can help investors make more informed investment decisions.

1. Credit Risk

Credit risk refers to the possibility that the issuer may not be able to pay interest or repay the principal amount on time.

Companies with lower credit ratings may be more vulnerable to changes in business conditions, rising borrowing costs, regulatory developments or deterioration in their financial position.

For example, if a company's cash flows weaken and its repayment capacity comes under pressure, the credit rating agency may downgrade its rating. This can affect investor confidence and the market price of its bonds.

However, a lower credit rating does not automatically mean that a company will default. It indicates a relatively higher level of credit risk that investors should evaluate before investing.

2. Liquidity Risk

Liquidity risk refers to the possibility that an investor may not find a buyer when trying to sell a bond before maturity.

Some high-yield bonds may have lower trading volumes compared to highly rated bonds. As a result, investors may have to wait for a suitable buyer or accept a lower selling price.

Investors should therefore consider their investment horizon and avoid depending on an early sale to meet immediate financial requirements.

3. Interest Rate Risk

Bond prices generally move in the opposite direction to market interest rates.

When interest rates rise, the market prices of existing bonds may fall. Similarly, when interest rates decline, existing bonds may become more attractive.

Investors planning to sell their bonds before maturity should keep this price movement in mind.

How Can Investors Manage These Risks?

Investing in high-yield bonds does not mean that investors should ignore the risks involved. A few important checks can help them make more informed decisions:

• Check the credit rating: Review the latest rating, outlook and rating rationale assigned to the specific bond.
• Understand the issuer: Look at the company's financial position, debt levels and ability to generate cash flows.
• Review the bond structure: Check whether the bond is secured or unsecured, its repayment terms and the security available, if any.
• Diversify investments: Avoid concentrating a large portion of your investment in a single issuer or sector.
• Consider the maturity period: Invest according to your financial requirements and investment horizon.

The objective is not simply to select the bond offering the highest YTM, but to understand whether the potential return justifies the risks involved.

Why Explore High-Yield Bonds on GoldenPi?

Finding and evaluating high-yield bonds can be challenging when investors have to compare different issuers, ratings, maturity periods and interest rates.

GoldenPi provides an online platform where investors can explore listed bonds across different issuers and credit rating categories.

Some key reasons to explore bond investment opportunities through GoldenPi include:

• Wide Range of Bond Opportunities: Explore listed bonds across different sectors, issuers and credit rating categories.
• Transparent Bond Information: Review important details such as coupon rate, YTM, maturity date, credit rating and other bond-related information.
• Easy Online Investment: Complete the investment process online through a simple and convenient interface.
• Demat-Based Holdings: Bonds purchased through the platform are credited to the investor's NSDL or CDSL demat account after settlement.
• Established Platform Track Record: GoldenPi has a registered user base of 20 lakh+ and reports zero defaults on bonds facilitated through its platform to date.

GoldenPi is a SEBI-registered Online Bond Platform Provider (OBPP), enabling investors to explore eligible listed debt securities through a digital investment platform.

While GoldenPi makes it easier to discover and invest in bonds, investors should independently review the risks and terms of each bond before making an investment decision.

How to Invest in High-Yield Bonds on GoldenPi

Investing in high-yield bonds through GoldenPi is a straightforward online process.

Here are the steps to get started:

Step 1: Log in to Your Account

Log in to your KYC-verified GoldenPi account.

Step 2: Explore High-Yield Bonds

Use the available filters to explore bonds based on yield range, credit rating or issuer sector.

Step 3: Compare Bond Details

Review important information such as coupon rate, maturity date, credit rating, YTM and traded volume to compare available opportunities.

Step 4: Review the Bond Documents

Read the relevant offer documents and review the issuer's financial information before making an investment decision.

Step 5: Complete the Payment

Select your preferred bond and complete the payment using an available payment method on the platform.

Step 6: Receive Bonds in Your Demat Account

After successful settlement, the bonds are credited to your NSDL or CDSL demat account.

Taxation on High-Yield Bonds in India

Returns earned from high-yield bonds are subject to applicable income-tax provisions in India.

• Interest Income: Interest earned from bonds is generally taxable at the investor's applicable income-tax slab rate. TDS is generally deducted at 10% when the applicable threshold of ₹10,000 is crossed, subject to prevailing provisions.
• Form 121: From 1 April 2026, Form 121 replaced the earlier Forms 15G and 15H. Eligible resident investors whose estimated tax liability is nil can submit this declaration to the bond issuer to avoid TDS on specified interest income, subject to applicable conditions. Avoiding TDS does not automatically make the interest tax-free.
• Capital Gains: If an investor sells a bond before maturity at a profit, the gain may be taxable. The applicable tax treatment depends on the bond, holding period and prevailing tax laws.

Since tax rules may change, investors should check the latest income-tax provisions or consult a tax professional for advice based on their individual circumstances.

Check These Links: Best Capital | Akara | Neogrowth | Neogrowth | Lucina

Please note that this list does not serve as an investment recommendation. Its contents are subject to dynamic updates based on rating changes, bond prices, and yields.

Conclusion

High-yield bonds can offer investors an opportunity to earn higher returns from fixed-income investments. With indicative YTMs ranging from 11% to 14% across the A- to BBB- rating categories, they can be worth exploring as part of a diversified investment portfolio.

However, higher yields also come with higher credit risk. Investors should look beyond the advertised returns and understand the issuer's financial position, credit rating, repayment capacity and bond structure before investing.

The key is to find the right balance between potential returns and the risks involved.

Explore the available high-yield bond opportunities on GoldenPi and make informed investment decisions based on your financial goals, investment horizon and risk appetite.