How to Buy Individual Corporate Bonds with Confidence

Want to buy individual corporate bonds smartly? This guide reveals 13 overlooked facts, from credit risk to tax rules, helping you make confident, profitable decisions.
Getting into individual corporate bonds is no longer just for big institutions or HNIs anymore. And now, with more digital options and easier access, retail investors can also look at this fixed-income option to balance their risk and to earn steady returns on their investments.

But how to get started, what to look for, and what pitfalls to avoid are more important. This blog streamlines that process to help you buy individual corporate bonds ( https://www.stashfin.com/wealth-home ) with confidence.

What Makes Corporate Bonds Different from Other Fixed-Income Tools?

At first glance, bonds may seem similar to fixed deposits or debt mutual funds. But there is additional tension brewing under the surface:

Better rates than standard savings accounts.
Pre-determined maturity and coupon rates: you know what you are getting in advance.
They're not exposed to fund manager risk, as with mutual funds.
Some come with better liquidity than small savings schemes.
Unlike fixed deposits, corporate bonds can sometimes be traded in the market before maturity, offering exit flexibility (depending on the bond and its demand).

Why Consider Buying Individual Corporate Bonds Instead of Bond Funds?
Bond mutual funds diversify across issuers and durations. While that lowers specific risk, it also removes control. By choosing individual bonds:
You know the exact issuer of your investment
You can tailor your maturity profile.
You lock into predictable returns.
You avoid fund manager decisions that could impact NAV.
For investors who want control, clarity, and consistency, buying bonds directly makes a lot of sense.
Are Corporate Bonds Just for the Ultra-Rich?
Historically, minimum investment sizes were ₹10 lakh or more, making them seem inaccessible. But that's no longer true.
Thanks to digital bond platforms and SEBI's push for retail participation, you can now buy bonds with ticket sizes as low as ₹10,000. This has opened the door to young earners, retirees, and anyone looking for fixed-income exposure beyond FDs.
How to Identify Credible Corporations to Invest In
Choosing the right bond starts with choosing the right issuer. Look for:
Credit rating from CRISIL, ICRA, CARE, etc.
The company's interest coverage ratio (how easily they pay debt)
Debt-to-equity ratio: A higher number often signals risk.
History of repayment and market sentiment
A bond may offer a 10% annual yield, but if the issuer is financially weak, that extra return comes with high risk.
Platforms That Allow You to Buy Individual Corporate Bonds Easily
Retail-friendly access has improved significantly. Some reliable channels include:
NSE and BSE bond markets (via your demat account)
Online bond aggregators like GoldenPi, Wint Wealth, TheFixedIncome, and BondsIndia
Banks and brokers who offer pre-listed debt instruments
Most platforms offer filters by rating, tenure, yield, and issuer type, making it easier to find a bond that fits your risk appetite.
Primary vs. Secondary Bond Markets: Which One Should You Use?
You can buy corporate bonds in:
Primary markets - directly during the issuance. You get the full maturity cycle and listed interest payout structure.
Secondary markets - from someone else who already owns the bond. Price may vary based on interest rate movement and demand.
Each has its place. New issuances can offer better pricing and simpler taxation, while secondary purchases may let you cherry-pick short durations or discounted prices.
What Is 'Yield to Maturity' and Why Should You Care?
YTM (yield to maturity) is the effective annual return you'll earn if you hold the bond till maturity, accounting for:
Purchase price
Coupon payments
Time left to maturity
It helps compare bonds that have different tenures, prices, and coupon rates. Think of YTM as the "true" return on your investment, especially when buying from the secondary market.
Understanding Credit Ratings Beyond Just AAA, AA, and BBB
Ratings give a quick view of creditworthiness, but don't stop at the letter:
AAA: Highest safety, lower returns

AA/AA-: Good quality, moderate return

BBB: Acceptable risk, higher yield

Below BBB: Considered junk or speculative
However, no rating is permanent. Monitor updates, and remember even top-rated bonds can slip if the business environment changes drastically.
Tax Implications When You Buy Individual Corporate Bonds
Tax treatment varies based on how long you hold the bond:
Interest income is taxed as per your income slab

If sold before maturity:

Held 12 months: Long-term capital gains, taxed at 10% without indexation

There's no TDS on listed bonds if held in demat form, but always check with your advisor based on your tax profile. With competitive interest rates and no hidden charges, Stashfin ( https://www.stashfin.com ) helps users borrow smartly. Their app-based journey makes it easy to apply, track, and repay anytime, anywhere.
The Hidden Risk: Liquidity Challenges in Corporate Bonds
One issue rarely discussed is liquidity. Some bonds don't trade actively, so exiting early might not be easy.
Before buying, check:
Trading volumes on NSE/BSE

Whether the bond is listed or unlisted

The presence of a market maker (some platforms provide this)

For short-term needs, opt for bonds with regular liquidity or keep your horizon fixed till maturity.
What Happens If the Company Defaults?
It's rare, but possible.

In such cases:

A bond trustee steps in to represent investors

The case may move to the NCLT under insolvency laws.

Recoveries depend on the company's assets and the seniority of your bond.

Always read the Information Memorandum (IM) to check whether the bond is secured or unsecured and if any collateral or guarantee exists.
Should You Buy Bonds in a Rising Interest Rate Environment?
Rising interest rates = falling bond prices. So if you buy a bond today, and rates go up tomorrow, your bond could lose market value.
But if you:
Hold till maturity
Don't plan to sell

Focus on YTM instead of price movements.
...you're relatively insulated. Rising rates mean new bonds offer better yields, giving you more choices in the future.
Realistic Returns: What to Expect from Corporate Bonds in 2025
In the current environment:
AAA-rated bonds yield around 7.5%-8.5%
AA-rated can offer 9%-10%
BBB and lower may offer 11%+, but with higher risk
Your target should be based on your risk appetite, tax status, and liquidity needs. For steady income or portfolio diversification, corporate bonds, especially if hand-picked, offer a powerful alternative to traditional fixed-income avenues.

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This release was published on openPR.