Although corporate FDs offer interest rates that are higher than bank FD rates, they are unsecured—a feature that the Companies Bill 2013 has half-heatedly tried to change. Chasing high returns of corporate FDs can expose you to the risk of losing your principal if you don’t check the credibility and rating of the company. Some FDs with highest rating (CRISIL FAAA) on offer currently are from companies like HDFC, Mahindra Finance, National Housing Bank and LIC Housing Finance. The highest rate (among the companies listed above) is on Mahindra Finance’s non-cumulative three-year FD (10%) and cumulative three-year FD (10.25%).
A fortnight ago, the maximum yield for AAA bond was 9.84%. With rising bond yields, you can expect to get an yield of over 10.30% for AAA rated bonds of maturity in the next six months and almost 11.50% for AA rated bonds.