With the benchmark 10-year government securities (G-Sec) yield rising marginally by 10bps (basis points) at 8.74% on 5th November, corporate bond yields have been close to what was offered a couple of weeks ago. You can expect to get yield of over 10% for bonds with lower than AAA rating. Bonds with AAA rating will fetch 9.69% to 9.84% yield to maturity.
SBI has raised fixed deposits (FD) rate by 0.2% on term deposit between 180-210 days. It will earn 7% against the existing 6.80%. Oriental Bank of Commerce (OBC) raised FD rates on select maturities by up to 0.5%. Term deposit with maturity 91-179 days would earn 0.25% higher interest rate at 8.75%. FD for term between 180 days to one year would earn 9% against the existing 8.50%.
For a saver interested in the safety of capital with public sector banks and also wanting to lock-in for more than a 10-year term, G-Secs are an option. G-Sec has ‘sovereign’ rating because the government will not default. The interest payment is semi-annual. There is no tax deducted at source on sale of G-Secs, like bonds and non-convertible debentures, even though the income is taxable.