Frequently asked questions
Underwriting, settlement, ratings and risk, answered the way the desk explains them to a new mandate.
Binary Bonds is a specialised fixed-income division of Binary Capital, focused exclusively on the primary and secondary bond markets. The desk underwrites, structures, prices and places debt for banks, insurers, mutual funds, pension funds, Non-Banking Financial Companies, family offices and corporates across India.
Six core services: corporate bond underwriting, government securities, high-yield bonds, bond portfolio management, credit rating advisory and secondary market trading. Each service can be delivered on its own or as part of an end-to-end mandate.
The desk works with institutional investors, banks, insurance companies, mutual funds, pension funds, Non-Banking Financial Companies, family offices and High Net Worth Individuals, and with corporate issuers seeking to raise debt or improve their credit profile.
The desk assesses the funding requirement and credit profile, structures the bond, coordinates rating and legal documentation, tests investor demand, prices the issue and places it with institutional investors. Post-issue support and secondary market making follow.
The primary market is where a bond is first issued or re-issued. The secondary market is where existing bonds trade between investors. Binary Bonds operates in both, from mandate and placement to market making and settlement.
Government Securities are central-government dated securities, usually with tenors from 5 to 40 years. State Development Loans are state development loans issued by state governments. Treasury Bills are short-dated discount instruments issued for 91, 182 and 364 days. All three are sovereign exposures with different cashflow and duration profiles.
After Know Your Customer and dematerialised account verification, the trade is reported to Indian Clearing Corporation Limited. Funds move to the clearing corporation's Reserve Bank of India settlement account and bonds move to the clearing corporation; once both legs are received, the trade is mapped and settled. Bonds credit to the client's dematerialised account and funds are released to Binary Bonds, typically on a same-day or next-day basis.
Bonds carry credit, interest-rate, liquidity and duration risk. High-yield paper carries more credit risk, and the 200-500 basis points premium is compensation for that risk. Sovereign paper removes credit risk but not duration or liquidity risk. Read the terms, rating and cashflows before allocating.
A bond public issue is a public issue of non-convertible debentures. The issuer publishes an information memorandum with the rating, coupon, tenure, security and covenants; investors apply at the issue price and the bonds are allotted and listed. It is debt, not equity, so the return is the coupon and principal repayment.
Interest is generally taxed at the investor's slab and may be subject to Tax Deducted at Source. A sale before maturity can produce a capital gain or loss depending on the holding period and purchase price. Listed and unlisted bonds can be treated differently. Confirm the treatment with your tax adviser before allocating.
Yes, if the bond is listed and the desk can source liquidity. The exit price depends on the curve, the credit spread and the size of the trade. The secondary market desk can provide two-way quotes and settle through Indian Clearing Corporation Limited.
Minimums are mandate-specific and depend on the instrument, the lot size and the desk's inventory. The desk confirms the executable size and the minimum ticket before the order is placed.
Still deciding?
A senior desk member will walk through your mandate, the instrument and the settlement path before you commit capital.