Investors with a risk appetite could consider investing in some of the non-convertible debentures (NCDs) available in the secondary market, as these could give a return of as much as 10-15 percent, say, wealth managers.
Uncertainty in the non-banking financial segment following the recent developments at the IL&FS Group, Essel Group, Dewan Housing Finance and the Reliance Group of Anil Ambani, has led to lower appetite for NBFC paper among investors, they say. With low demand, yields on their instruments have shot up.
Dalal recommends NCDs of Edelweiss and JM Financial Credit Solutions to such investors. However, for retirees and risk-averse investors who depend on interest income for their expenses, he suggests sticking to AAA-rated companies that are backed by strong management. NCDs of AAA-rated companies, like Tata Capital, L&T Finance and Mahindra Finance, offer lower yields of 7.5-9   per annum.
These yields are attractive to investors given that bank deposits are offering just 6.5-8 percent a year.
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