Fixed-Income Bonds: 'A+' Credit Access vs 'A+' InCred

Are you searching for fixed-income bonds but unable to decide which way to go? With so many bonds to select from, it can be confusing to determine which will offer better returns.

Fixed-income bonds can provide investors with a steady source of income. But, not all bonds are equal and come with similar attributes. When investing, it is essential to consider a bond issuer's credit rating as it impacts risk and default risk significantly. With a high rating, the chances of default risk get lower.

In this post, we will compare A+rated fixed-income bonds offered by Credit Access and InCred.

Both boast strong credit ratings, but which one is right for you? 

We will highlight features and benefits associated with each bond to aid you in making an educated choice. Let’s begin.

What Are A+ Rated Fixed Income Bonds?

Credit ratings are assigned by SEBI-regulated rating agencies, like ICRA, CRISIL, and CARE. The A+ rating signifies high quality and has a lower risk of default compared to lower-rated bonds.

Now that you are clear about what it is, let’s begin the comparison so that you can make your decision without thinking twice.

Credit Access vs. InCred: Credit Quality And Rating

Credit Access is an innovative microfinance institution offering financial solutions to low-income households and small businesses. This Bond has an A+ rating from ICRA, indicating its high degree of safety for timely interest and principal payments.

InCred, on the other hand, is a non-banking finance company (NBFC) offering financial services to small and midsize enterprises with an A+ rating from CRISIL.

Credit Access and InCred both have similar credit ratings, indicating a high degree of trustworthiness. However, Credit Access specializes in microfinance, while InCred offers SME finance products.

Credit Access vs. InCred: Yield And Coupon Rate

Consider both yield and coupon rates when making your selection of fixed-income bonds. Yield measures the overall return on investment, while coupon rate describes the interest payable.

Credit Access currently offers a bond yielding 9.15% with a 9.60% coupon rate, While InCred offers an annual yield of 10% and a coupon rate of 9.45% on its bond. 

This means for the same INR 10,000 invested, Credit Access will provide a higher interest amount than InCred, while the total returns on the Incred bond will be higher. If you are looking for a higher monthly payout, then CreditAccess bond may be a preferred option. 

Credit Access vs. Incred: Ticket Size

Bond prices and market values play a pivotal role in assessing an investment's attractiveness, with Credit Access and Incred bonds both offering flexible minimum ticket sizes that cater to different investors.

Credit Access's minimum ticket size of INR 10,000 allows retail investors with moderate investment capacities to participate in its bond offerings without an entry barrier, making this platform appealing to individual investors looking for ways to diversify their portfolios.

By contrast, Incred bonds require an initial ticket size of INR 1,00,000. 

Credit Access vs. Incred: Covenants

Covenants are an essential feature of fixed-income bonds, protecting bondholders while outlining the terms and conditions of the bonds. Let's compare and contrast Credit Access and Incred bonds when it comes to this regard.

Credit Access bonds come with strong covenants designed to safeguard bondholder interests. This may include regular financial reporting requirements, restrictions on additional debt issuance, or asset sale restrictions - measures that ensure transparency while upholding bondholder rights and protecting them effectively.

Similar to Credit Access bonds, Incred bonds also contain well-defined covenants to safeguard investors. Such covenants include restrictions on dividend payments and mergers and acquisitions activity as well as debt-to-equity ratios aimed at maintaining Incred's financial health while protecting bondholder investments.

Issuer Information And Financial Health: Which Bond Is More Secure?

It is essential to carefully evaluate the issuer before investing in fixed-income bonds. 

Credit Access, an established financial institution, has sustained its strength over time by upholding strong finances. Thanks to a solid balance sheet and consistent profitability, Credit Access is a reliable issuer of fixed-income bonds with diverse portfolios managed with risk mitigation practices in mind that help ensure stability while decreasing default risks.

On the other hand, Incred, also rated "A+", has experienced some challenges recently. Notably, their increase in non-performing assets (NPAs) is an indicator of possible credit risks. It should be noted that they have put forth proactive steps to address their NPAs as part of an overall plan to strengthen financial health and remain financially sound.

Final Thoughts

Selecting a suitable fixed-income bond investment requires careful consideration of your risk tolerance, investment goals, and personal preferences. Credit Access and InCred bonds both boast A+ ratings with attractive returns and stable credit profiles; ultimately, the choice comes down to personal preference. Grip Invest makes investing easy, convenient, and safe; sign up now for more information and start building your fixed-income portfolio with confidence!

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Disclaimer: This communication does not constitute advice relating to investing or otherwise dealing in securities and is not an offer or solicitation for the purchase or sale of any securities. Grip Invest Technologies Private Limited ("Grip", formerly known as Grip Invest Advisors Private Limited) is not registered with SEBI in any capacity and does not advise, encourage, or discourage its users to invest or not invest in any securities. Grip is solely an execution-only platform and does not guarantee or assure any return on investments made by you in any opportunities sourced by Grip and accepts no liability for consequences of any actions taken based on the information provided. Your investment is solely based on your judgement. Investments in debt securities are subject to risks. Read all the offer-related documents carefully.