What are the main points to be kept in mind by the investor while investing in the Debt Markets?
The main features which you need to check for any debt security is: • Coupon (or the discount implied by the price as in the case of zero coupon bonds) and the frequency of interest payments. The securities can also be chosen in such a manner so that the interest payments coincide with any requirements of funds at that point of time. • Timing of Cash Flows – In case the interest and redemption proceeds, at one single point or at different points of time, are planned to be used for meeting certain planned expenses in the future. • Information about the Issuer and the Credit Rating – It is essential to obtain enough information about the background, the business operations, the financial position, the use of the funds being collected and the future projections to satisfy oneself of the suitability of the investment. As per the regulations in force in the capital markets, it is essential for any corporate debt security to obtain a credit rating from any of the major credit rating agencies
