Encash on high interest rate regime

High Interest Rate Regime: Investors should utilise this scenario to lock in their investments

Interest rates are likely to peak out in the near future. So investors should start locking in during these high interest rate regime.

We have noticed earning 2% more than long term inflation rates is a rare event. Presently investors have that opportunity.

Interest rates tend to move in cycles with peaks and troughs. In 2013, host of PSUs issued 20 yr tax free bonds bearing interest rates in the range of 8.7% to 8.9%.

Around the same time companies like Tata Power and Tata Steel issued perpetual bonds with coupon of 11.3 -11.4%.

Recent trends seem to indicate history is likely to repeat (wrt rates at least if not the instruments) namely

– GoI hiking Sr citizen Saving Scheme rates by 60 bps to 8% in feb

– LIC revising annuity rates in Jan

– HDFC raising 10 yr NCD at ~8.0% in March

– BoB 2099 perpetual bonds available at 8.6%