Market-linked debentures are like zero-coupon debt instruments where the payoffs are dependent on the linked indices. Their tax treatment, though complicated, can offer better post-tax returns to investors, compared to plain vanilla debt securities.
Low interest rates have left debt investors with very few doors to knock. Earlier, an ‘attractive’ way to offset compression in yield was to climb down the rating curve. But after a string of credit-stress events, investors are looking for a new game in town, like the market-linked debentures (MLDs). The payoffs in MLDs are dependent on a reference security or an index. If an MLD is linked to, say the Nifty 50, then the interest payable will
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