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What are Covered Bonds?

Average returns11%

Average Yield10.80%

Min. Investment₹1,00,000

What are Covered Bonds?

Covered Bonds are a hybrid between asset-backed securities/mortgage-backed securities and normal secured Covered Bonds. Mortgage lenders primarily use them and act as a tool for refinancing. Investors holding covered bonds have a right to a pool of issuer assets, which provides additional protection to investors.

Types of Covered Bonds

These bonds obtain legislative support, making the instrument bankruptcy remote.

These bonds obtain bankruptcy remoteness through contractual features.

With respect to covered bonds, the cover pool and the liability for investors both fall on an issuer’s balance sheet. The increasing cover pool is secured and it remains constrained in case the issuer is forced to go through bankruptcy.

The covered bondholders have to face dual recourses – one of the issuers and the second one on the cover pool.

The cover pool may be dynamic or static, subject to the structure.

Since the primary exposure falls on the issuer, any prepayment risk is absorbed by the issuer.

Covered bond ratings are normally higher than the issuer’s rating. Internationally, covered bonds enjoy the prestige of a maximum of 6-notch better rating as compared to the issuer’s rating.

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How to Invest in Covered bond

Investment in Bonds can be done in a few easy steps with Quick KYC, Bond Selection and a convenient payment gateway.

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1

Complete your KYC

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2

Select your Bond

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3

Make Investment

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1Complete your KYC
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2Select your Bond
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3Make Investment
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Transaction securely processed Via Exchange

Each transaction undergoes processing through BSE, NSE and RFQ exchanges with settlement facilitated by ICCL & NSCCL – both regulated by SEBI, ensuring a secure, risk-free, and fully protected financial transaction.

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Features of Covered bond in India
  • It provides the benefit of dual recourse – on the cover pool and the issuer.
  • Considered safer than normal bonds because of additional cushion.
  • Due to the complexity and investment requirements, the investors are generally institutions and HNI.
  • The covered bondholders have a preferential claim against a dedicated pool of collateral assets or the proceeds of these assets.
  • The investors can exercise full recourse to the issuer.
  • There is a supplementary dynamic collateral pool that supports the covered bonds, to protect the funds of the investors.

Frequently Asked Questions

BondsIndia has changed the way investors used to trade earlier. We have made KYC completely online and swift. We have the biggest library of listed bonds for potential trade.
The amount of investment in bonds depends on your financial goals, age, tenure, and risk-reward capacity.
You can make the minimum investment of Rs. 1000/- (face value) in Bonds. It can go upward depending on the face value of individual bonds.
There is no maximum limit to investment in Bonds. You can choose the amount considering your financial goals.
Yes, investing in covered bonds can be a safe choice.
The Dual Recourse feature makes investment in bonds safe and secure for investors.
You can contact our Investment Experts for help in buying bonds.
You can contact our Investment Experts for help. They will help you to invest in covered bonds in India without hassle.

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