Have online bond platforms really brought bonds to the doorsteps of retail investors | Simply Save

With a multitude of online bond platforms, commonly referred to as OBPPs or online bond platform providers springing up in recent years, investing in bonds has become very easy. Unlike in the past, these platforms are now regulated by the securities market regulator, SEBI. But are retail investors really latching on to bonds on these platforms? Not quite.

To listen to the podcast, click above. To read the podcast conversation, scroll down.

Moneycontrol spoke to Vibhor Mittal, COO of Aspero, an online bond platform from the Yubi Group, a fintech firm on what all Aspero offers, the extent of retail investor participation, and what lies ahead for such platforms given the growing competition.

Here are a few important points that Mittal highlighted:

-Aspero currently offers listed corporate bonds and sovereign gold bonds. The platform plans to launch other regulated products such as government securities and securitized debt instruments, too.

-Aspero offers bonds with ratings ranging from AAA to BBB at yields of 9-15%. These bonds are shortlisted based on due diligence by an internal credit and risk team.

-According to Mittal, demand for bonds has largely been coming from high networth individuals (HNI), ultra HNIs and family offices. “We are only scratching the surface when it comes to the retail segment where ticket sizes could be as small as Rs 10,000 to Rs 40,000,” says Mittal.

-Online bond platforms have facilitated three things for investors. One, ease of access, two, greater transparency (more information is available on the issuer) and three, better pricing (higher yields). Today, investors have far more bond issuances to choose from than before, says Mittal.

-Buy and sell bonds - currently, you can buy bonds on Aspero. A formal mechanism for the platform to buyback these bonds from investors, however, does not exist as of now.

-According to Mittal, they make thin spreads (ranging from as low as 5 basis points to as much as 50 basis points in some cases) on the bonds they sell. This makes the business primarily a volumes game.

-Mittal highlights that there is no difference between buying sovereign gold bonds in primary issues versus from the secondary market (for example, as offered by Aspero). But the customer must ensure that he is getting the SGBs at the right price in the secondary market by comparing it with the prevalent gold prices.

-Future of bond platforms – Mittal says that the market potential in a country like India is huge. Even if a small proportion of the flows going into equity were to come to the fixed income market, this space could grow exponentially. But given that there are more than 40 OBPPs today, there is definitely room for some consolidation.