Should you invest in these debts?

You ask an investor which instrument is more volatile and most probably he will associate volatility with equity investment and debt for him is relatively safe and less volatile. Nevertheless, it’s changing fast for few companies. Some of the troubled NBFC companies are witnessing sharp movement in their bond prices. For example, DHFL’s NCD that is maturing on August 16, 2019 saw its price dropping from a high Rs. 1,012 on May 14 to a low of Rs. 753 on June 7, 2019 before rising to Rs. 903 on June 11, 2019. Similar volatility can be found in the debt instruments of other NBFCs also, however, they are not as extreme as in case of DHFL.

Nonetheless, this volatility is offering an opportunity for investors who have an appetite for high risk. Some of these bonds are offering returns of more than 50 per cent in less than six months, which translates into an annualised return of more than 100 per cent. We are listing down the debts that are offering the highest yield to maturity (YTM). An investor who wants to make quick bucks after considering the risk of losing his investment can take exposure to the NCDs of these troubled NBFCs.