Secondary Market Bonds: Investing Smartly To Boost Portfolio Liquidity | 2025
A bond is a fixed-income-generating debt instrument issued by corporations, governments, and other entities to raise capital. While bonds are initially issued in the primary market, where issuers sell directly to investors, it is the secondary market that brings liquidity and flexibility to bond investing.
In the secondary market, investors can freely buy and sell previously issued bonds, creating a dynamic and active trading environment. Continuous trading offers price discovery, autonomy, and access to a diverse range of opportunities, transforming bonds into powerful instruments for portfolio diversification, fixed income investing, and capital preservation.
The Indian Bond Market was valued at USD 1.8 trillion as of December 20221. Subsequently, the bond market in India reached USD 2.69 trillion at the end of December 20242. The growing popularity of bonds as an investment medium has yielded a growing secondary bond market. The average daily turnover of the secondary bond market rose from INR 5,722 crore to INR 7,645 crore in 2024–253.
The popularity of these fixed-income investments also stems from the liquidity offered by the secondary bond market. Therefore, to simplify bond investment, Grip has crafted the ultimate bond trading platform that allows investors to buy bonds directly from other investors.
How To Invest In Secondary Bonds On The Grip's Bonds Marketplace
The latest addition to Grip Invest is the Marketplace. It is a secondary bond trading platform that allows investors to access the best bonds to invest in India. Comparison of the live bond prices, features, ratings and much more allows greater flexibility and control for investors.
This section discusses how bonds are traded in the secondary market through the Grip’s Marketplace.
Steps To Get Started
Currently, the Marketplace feature is accessible only on the Grip App. The steps to begin using Grip Marketplace are outlined here.
Step 1: Download the Grip App and complete the registration process. Users can sign up using their Google account, phone number or email address.
Step 2: The investor must complete their KYC process to start investing. Identity proofs like the PAN card, AADHAR card, and bank details are required for KYC. The KYC is a smooth process on Grip and can be completed within 2 minutes.
Step 3: From the panel given below, select the Marketplace option.
Step 4: After choosing the marketplace option, the user can see a range of secondary market bonds. Investors can compare their live prices, ratings, maturity dates and much more.
For instance, the features of a Muthoot Bond listed on the marketplace are discussed below.
| Rating | Crisil A+ |
| Yield to Maturity | 10.5% |
| Tenure | 17 Months |
| Minimum Investment | INR 7,499.99 |
| Number of bonds left | 3.6 lakhs |
| Comment | Investors can sell this bond anytime*. |
The steps to invest in bonds through Grip Marketplace are simple and convenient. However, before investing, investors must compare bonds online to optimise their investment.
Evaluating Bond Investment Options
Investors can not only buy bonds online but also compare their bond options through Grip’s Marketplace. Investors must consider the factors discussed below before investing in bonds in the secondary market.
1. Yield
Bonds are debt securities. It delivers fixed returns to the investors based on coupon rates. Moreover, bonds in the secondary market are sold at the prevailing market prices, resulting in capital appreciation.
Grip Marketplace has simplified the yield calculation process. The software automatically calculates the returns generated from a bond when the user enters the number of units they expect to buy.
For instance, Mr A wants to buy 5 units of Navi Fiserv bond. He can check his expected yield to maturity by simply clicking on the chosen bond and entering the number of units.
2. Maturity
The entity that issued a bond is the debtor of the investor of the bond. Therefore, bond investment has a fixed maturity date by which it must be repaid. Bonds in the secondary market have shorter tenures because they are not newly issued.
For instance, Mr. A buys a newly issued bond which has a maturity period of 12 months. After 3 months, he sells the bond to Mr. B. Therefore, Mr. B has to bear a tenure of only 9 months.
It is advantageous to both the initial investor and the new investor because the liquidity increases for both. The initial investor can sell the bond whenever he deems fit. Moreover, the secondary investor not only faces a shorter maturity period but can also resell the bond whenever convenient.
3. Credit Rating
Understanding how to invest in bonds is incomplete without understanding the credit rating system associated with it. Bonds are graded by credit rating agencies such as Crisil, ICRA, CARE, etc. These grades are assigned based on their creditworthiness, i.e. the degree of risk associated with them. It aids investment decision-making by simplifying tons of fiscal data into interpretable graphs.
The rating methodology and grading scale differ from one CRA to another. For instance, the table below shows the grading scale of Crisil.
Credit Rating | Description |
AAA | Highest safety with the lowest credit risk. |
AA | High safety and timely management of obligations. |
A | Adequate safety levels. |
BBB | Medium credit quality. |
BB | Moderate quality and default risk. |
B | Significant default risk. |
C | High default risk. |
D | Expected to default soon. Lowest safety. |
Source: CRISIL5
Key Benefits Of Investing In Secondary Bonds
Discussed below are the various advantages of investing in secondary market bonds in India.
1. Liquidity And Ease Of Trading
In the absence of a secondary market for bonds, the liquidity of bond investments might have diminished. Investors can sell their bonds in the secondary market whenever they deem fit. This improves the autonomy of individual investors and gives them more control over their portfolios.
2. Real-Time Price Discovery And Transparency
The marketplace by Grip offers real-time bond trading in India. Investors can now compare the real-time prices of various bonds and make an informed investment decision.
Real-time analysis not only improves the quality of investment by keeping investors updated with the current trends but it also improves transparency between the different stakeholders of the transaction.
3. Portfolio Diversification With Bonds
Optimum portfolio diversification allows investors to maximise their returns whilst minimising the risk. Bonds are fixed-income generating securities that can help control risk. Moreover, being a debt security, they get priority in capital repayment during dissolution.
For instance, if XYZ aims to shut down its company, bonds have to be redeemed before equity because they represent debt capital.
4. Access To A Wide Range Of Bonds
Marketplace by Grip offers the ultimate bond trading platform that allows investors to perform a real-time analysis of different bonds. Investors can base their decisions on credit ratings, maturity periods, yields and much more.
The table below shows the list of different high-yield bonds in India that are currently trading in the Grip Marketplace.
| Bond | Yield (%) | Credit Rating | Maturity (Months) |
| Navi Finserv | 9.75 | Crisil A | 5 |
| Muthoot | 10.5 | Crisil A+ | 17 |
| Oxyzo | 10 | Crisil A+ | 9 |
Secondary Bonds vs. Other Investment Options
Other than the bonds in the secondary market, there are several other investment methods.
This section will compare the secondary market bonds with other securities to help investors make an optimal investment decision.
Comparison with Primary Bonds
Bonds can be issued either in the primary market or the secondary market. The distinctions between the two bond investing categories are displayed in the table below.
| Parameters | Bonds in secondary market | Bonds in primary market |
| Meaning | These bonds are traded between investors. | These are newly issued bonds sold by the issuer. |
| Participants | These bonds are sold by an investor to another investor. | These bonds are sold by an issuer to an investor. |
| Nature of bond | These are existing bonds. | These are freshly issued bonds. |
| Price | The price of bonds is set by market forces. | Prices of bonds are sent by the issuer. |
| Frequency of trade | Bonds can be traded multiple times in the secondary market. | Bonds can be traded only once in the primary market. |
| Objective | The primary objective is to offer liquidity to the investors. However, it also offers an investment opportunity to new investors. | Source of capital for the issuer and an investment avenue for investors. |
Comparison With Stocks And Mutual Funds
The table below compares bonds with two other popular investment avenues, namely stocks and mutual funds.
| Particulars | Bonds | Stocks | Mutual Fund |
| Meaning | A type of debt instrument issued by corporations, governments and other entities. | It represents ownership of the issuing company. | It pools the funds of a group of investors and invests it in a basket of securities. |
| Nature of investment | Bonds are a debt investment. | Stocks are an equity investment. | It can have both debt and equity investments. |
| Status of investor | Creditor of the issuer. | Part-owner of the issuing company. | Unitholders of the fund |
| Returns | Fixed returns are provided in the form of interest. Investors can sell their bonds and generate capital gains. They are fixed-income generating securities. | Capital gains derived through trading depend on the prevailing market price. Dividend payment is at the discretion of the company. | It may or may not generate fixed returns based on the nature of the mutual fund. |
Risk and Return Profile
Like any investment medium, bond investment strategies depend upon the risk and return profiles of the investment medium. The risk and return profiles of many bond investing options are contrasted in the table below.
| Security | Risk | Return |
| Investment-grade bonds | Medium to low | High to medium |
| High-yield bonds | High to medium | Very high |
| Fixed deposits | low | low |
| Equity | High to medium | High to low |
Conclusion
Bonds are usually considered one of the safe investment options in India because it is a debt instrument that gives consistent returns. Bonds can be traded either in the primary or secondary markets. Bonds in the secondary market not only offer investment opportunities to prospective investors but also increase the liquidity of the security.
Liquid bonds in India allow investors greater autonomy over their portfolios. The marketplace by Grip allows investors access to a range of secondary market bonds. Investors can freely trade bonds with other investors, thus increasing the liquidity of the investment. Investors can use the Marketplace feature to evaluate a variety of bonds and come to a well-informed conclusion.
What are you waiting for? Visit Grip Invest Marketplace today and compare a range of secondary market bonds based on their ratings, yield, maturity and much more. Happy investing!
FAQs On Investing On The Secondary Bond Market
1. What are the main risks associated with secondary bonds?
The primary risks connected with secondary bonds include interest rate risk, credit risk, inflation risk, and liquidity risk. It refers to the fall in the market price of existing bonds when new bonds, offering higher coupon rates, enter the market. This feeds into the liquidity risk because existing bonds suffer diminished liquidity due to lower rates. Moreover, inflation risk is common among all investment avenues. Investors can diminish these risks by comparing the historical trends of the bonds they wish to purchase.
2. How does the liquidity of secondary bonds compare to primary bonds?
Bonds operate in both the primary and secondary markets. When a fresh bond is issued for the first time by the issuer to an investor, it is a primary market operation. Any subsequent buying and selling of the bonds leads to secondary market operation. Therefore, the secondary market is the source of liquidity in bonds. In the absence of a secondary market, investors would not be able to liquidate their investment before maturity.
3. How do secondary bonds perform during economic downturns?
Secondary bonds, particularly high-quality bonds like government bonds, typically fare well during economic downturns because they are viewed as safer investments than equities. Interest rates decline frequently during economic downturns as central banks attempt to boost the economy. Therefore, bond prices typically increase. On the other hand, bonds issued by financially troubled firms or those with more credit risk may see price drops and liquidity problems.
References:
1. IIBF, accessed from: https://tinyurl.com/iibfsecondarybond
2. The Economic Times, accessed from: https://economictimes.indiatimes.com/markets/bonds/why-bonds-belong-to-every-indian-investors-portfolioand-why-now-is-the-ideal-time-to-invest/articleshow/120337864.cms?from=mdr
3. The Business Standard, accessed from: https://www.business-standard.com/finance/news/corp-bond-secondary-mkt-daily-turnover-grows-around-2k-cr-in-fy25-rbi-125052900897_1.html
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