What Is BondX?

Published on
Jul 05, 2023
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    What Is BondX?

    Have you been a long-time investor in Bonds? Or, are you looking to make your first investment in Bonds but are held back by the limited options available, especially at smaller ticket sizes? If the answer to these questions is a resounding ‘Yes!’, BondX by Grip is the alternative you have been waiting for!

    Sounds intriguing? Before going deeper into the details of this all-new offering, here’s a brief about Grip.

    What Is Grip?

    Grip is an investor-first, tech-driven, transparency-focused digital investment platform that gives investors like you access to curated non-market-linked alternative investment opportunities across the entire risk-reward spectrum to best cater to your wealth creation. 

    Grip has been at the forefront of innovation and new initiatives in the industry, backed by the unwavering trust of our users, enabling us to achieve many industry firsts in India: 

    • 1st asset-backed leasing discovery platform
    • 1st to list an alternative investment instrument (LeaseX - SDI) On NSE
    • 1st credit-rated, diversified version of invoice discounting instrument (InvoiceX)
    • 1st to democratise access to NBFC loan books through SEBI and RBI-regulated, listed product (LoanX)

    We are now excited to present our latest product - BondX. This new product aligns with our commitment to providing our users with a more transparent, compliant, and greater variety of investment options.

    Why The Need For BondX?

    In the current environment of varyingly higher levels of interest rates, Bonds offer inflation-beating returns and diversification; however, only 20% of Bonds are easily accessible to investors like you.

    Why? There are three key reasons: 

    • Bonds typically have a high face value (INR 10 lakhs and above per bond), which makes it difficult for investors to diversify their risk across several Bonds 
    • Most Bonds are often unlisted on the stock exchange 
    • Bonds are often privately placed to a small set of investors

    Additionally, though users loved the curated opportunities available on the platform, they also wanted:

    1. Greater Access: Access to the majority of the Bond universe
    2. Diversification: Exposure to a diverse pool of Bonds in a single instrument
    3. Regulatory Compliance: SEBI or RBI-approved structure that safeguards the investors
    4. Credit Rated: Rated by tier-1 A credit-rating agency for higher transparency 

    With BondX, we are excited to share that we can attend to all these investor requests.

    What Is BondX?

    BondX is the first-of-its-kind alternative investment product that pools together investment-grade rated Bonds from a curated set of issuers and provides access to investors at a fractionalized investment amount. It’s a diversified, SEBI-compliant, and credit-rated instrument available for individual investors.

    Understanding The Impact Of BondX On Investors

    Let’s consider a case where you have five unique Bonds that you can invest in. Three come with a hefty INR 10 lakh ticket size, while the other two have a more accessible INR 1 lakh ticket size. Buying even one unit of these Bonds individually would require an investment of INR 32 lakhs.

    With BondX, you can gain exposure to this curated portfolio of 5 Bonds and achieve the same diversification levels at ticket sizes of just ~INR 2-3 lakhs! 

    Each BondX opportunity entails cash flows from a pool of bond receivables of several issuers, thus offering the benefit of diversification to the investors. Other benefits include:

    • The issuer secures each bond by placing a minimum of 1.0x of the principal outstanding as collateral
    • Investors are provided with fixed and regular payouts in the form of interest and principal, as per the cash flows of the underlying Bonds

    Additionally, only the interest component is expected to be taxed by the investor. It is monitored by the SEBI registered trustee to meet any delay or shortfall in payments.

    Benefits Of Investing In BondX

    BondX will truly be transforming investing in Bonds by providing the following benefits to retail investors, which have never been seen before:

    1. Democratising high face-value Bonds at lower ticket sizes
    2. Providing access to unlisted Bonds, generally only accessible to high net-worth individuals (HNIs) and institutional investors
    3. Investing in multiple Bonds and diversifying portfolio via a single instrument
    4. Is regulatory compliant with a credit rating from a tier-1 credit rating agency for higher transparency

    How Does Investing In BondX Compare To Individual Bonds?

    BondX retains all the existing features of Bonds such as non-market linked fixed returns, attractive risk-reward proposition, rated by tier 1 credit rating agency, listed on NSE/BSE and held in investor’s Demat, with the X factor of securitisation:

    • Diversification across a pool of Bonds and multiple issuers through a single instrument
    • Access to Bonds at low ticket sizes is usually not available for retail investors due to high face value

    In conclusion, the introduction of BondX presents a more streamlined approach towards fixed-income, regulatory-compliant products, enabling investors to diversify their portfolios and foster financial growth effectively. 

    Want to stay at the top of your finances? Don’t forget to sign up!

    Join the community of 2.5 lakh + investors and learn more about Grip, the latest financial knick-knacks and shenanigans that take place in the world of investing.

    Happy Investing!

    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.

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