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SREI Infra NCD issue – Good buy for investors with moderate risk and lower tax bracket

#SREI Infra Finance issue of secured NCD of Rs. 250 Crore with an option of retaining upto Rs. 1000 Cr.  to be launched on Sep 7, closing on sep 29, 2016.  
About the company – #SREI Infrastructure Finance Ltd, is a RBI registered non-deposit taking NBFC. Classified as an “Infrastructure Finance Company” in the year 2011 by RBI. The company was originally incorporated in New Delhi on March 29, 1985 by the name Shri Radha Krishna Export Industries Limited with the Registrar of Companies, Delhi & Haryana, in accordance with the Companies Act 1956 as a Public Limited Company, to undertake lease and hire purchase financing, bill discounting and manufacture and export of certain goods. Company’s name was changed to Srei International Limited on May 29, 1992 and further changed to Srei International Finance Limited with effect from April 12, 1994. The name of the Company was further changed from Srei International Finance Limited to its existing name Srei Infrastructure Finance Limited on August 31, 2004. Company is registered as a Non-Banking Financial Company within the meaning of the Reserve Bank of India Act, 1934.
About the issue
From liquidity crunch to overflow, the market has seen a major shift of sentiment in past 6 months. The equity IPOs to Bond issues investors are lapping it up all.
After an overwhelming response of two tranches of DHFL Secured NCD issues, SREI is next on the block. SREI’s base issue at Rs. 250 crore, may retain up to 1000 crore with green-shoe option
Features in details –
Issue open and close – Opens on 7th September 2016, closes on 28th September 2016, however, the allotment is on first cum first served basis and the company may close issue on oversubscription within a day or two as well.
The NCD Bond – SREI is offering NCDs which are backed by security/assets. Hencce, the capital investment is secured by SREI, incase of non-payment/ non-liquidity invesors has the right on liquidating the secured asset to recover the cost.
Tenor – 400 days, 3 years and 5 years
Annual yield – Upto 10%, depending on tenor and interest payout option
Face value – Rs. 1000/ unit
Minimum and maximum investment –  The minimum application amount is Rs. 10,000 collectively across all options on NCDs and in multiples of One (1) NCD after the minimum application.
Categories of Invstors and allotment ratio – 
Category I – Rs. 200 crore
Category II – Rs. 200 crore
Category III – Individual & HUF Investors – Rs. 600 crore
NRIs, QFIs and foreign nationals cannot invest in this issue.
                                               
Credit Rating – SREI has received an AA+ from BWR, which s second highest rating after AAA, making it a safe investment option. This issue has received one notch better than last Secured NCD issue of last year which was at  AA.
Format  – Investors can hold both in physical or demat format, demat is not mandatory.
Listing – will be listed on both exchanges – BSE and NSE
Trading – Allowed from the first day, no lock-in period
Taxation – Though the dematerialised NCDs don’t attract TDS, the investment will taxed at short term (less than a year) and long term (debt investment more than a year are taxed at 10%) depending on the holding period. The interest will be taxed as per the tax bracket of the investor.
Series
I**
II#
III***
IV**
V#
VI
VII**
Frequency of Interest Payment
Cumulative
Monthly
Annual
Cumulative
Monthly
Annual
Cumulative
Minimum Application
Rs. 10000 (10 NCDs)
Face Value/ issue price
Rs. 1000/-
In multiples of
1000 (1NCD)
1000 (1NCD)
1000 (1NCD)
1000 (1NCD)
1000 (1NCD)
1000 (1NCD)
1000 (1NCD)
Tenor
400 days
3years
5 years
Coupon per annum
NA
9.35%
9.75%
NA
9.6%
10%
NA
Effective Yield (per annum) for Category I, Category II & Category III Investor(s)
9.08%
9.76%
9.82%
9.75%
10.02%
10.04
10.00%
Mode of Interest Payment
Multiple mode
Amount (` / NCD) on Maturity for Category I, Category II & Category III Investor(s) **
Rs. 1100
Rs. 1000
Rs. 1000
Rs. 1322
Rs. 1000
Rs. 1000
Rs. 1611
                                                             
Application Form for SREI Infra NCDs – Click here
Financial Health of the company – Annual Results Consolidated Figures in Rs. Crores / View Standalone
Mar-13
Mar-14
Mar-15
Mar-16
TTM
Sales
3,188.74
3,235.17
3,339.32
3,234.14
3543.88
Expenses
518.89
521.11
696.54
629.96
945.64
Operating Profit
2,669.85
2,714.06
2,642.78
2,604.18
2598.24
OPM
83.73
83.89
79.14
80.52
74.7
Other Income
25.8
25.19
21.24
27.8
49.29
Interest
2,139.25
2,350.28
2,274.15
2,310.75
2278.94
Depreciation
193.62
163.35
201.43
215.29
225.66
Profit before tax
362.78
225.62
188.44
105.94
142.93
Tax
102.71
88.11
67.04
44.41
51.31
Net Profit
263.18
138.51
129.11
72.52
100.77
EPS (unadj)
5.14
2.67
2.46
1.34
Dividend Payout
15.88
18.18
19.49
34.69
Compounded Sales Growth:
Compounded Profit Growth:
10 Years:
25.49%
10 Years:
-2.15%
5 Years:
14.66%
5 Years:
-17.86%
3 Years:
0.47%
3 Years:
-36.30%
TTM:
10.78%
TTM:
13.93%
*data – www.screener.in
After a difficult period of three years, company has seen a upward trend in last one year. The balance sheet and P&L sheet reflects the same.
Should you invest in #SREI secured Non-Convertible Bonds? 
It is a good debt investment  option with high yield and attractive tenor spread of 400 days, 3 years and 5 years. #NCDs are being offered by reputed infra-finance company, having a minimum investment requirement of Rs. 10, 000. The NCDs are secured, backed by assets, which means incase of default/ non-payment, assets can be liquidated to repay the debts.
The #coupon rate across segment is expected to be just above 1.5- 2 % from any bank FDs at this point of time. While a bank FD is offering 7.5% interest on yearly deposit, 400 days option is giving a good 1.5% extra return. Also, after a rough patch, the financial health of the company has improved thus interest payment ability. Brickworks has given it a thumbs up by giving it notch higher Rating of AA+ in the latest issue.
A person with moderate risk profile can invest a part of fixed income portfolio in this issue. Person in lower tax bracket will get to see higher return.


Risks in this issue – 
·         NBFC Business is particularly vulnerable to volatility in interest rates
·         SREI is in infrastructure sector, which has seen lull for over five years
·         Any increase in the levels of non-performing assets in loan portfolio, for any reason whatsoever, would adversely affect the business, results of operations and financial condition   
·         SREI derive majority/substantial of our revenues from our top 20 borrowers. Inability to maintain relationship with such borrower or any default and non-payment in future or credit losses of our single borrower or group exposure where they have a substantial exposure could materially and adversely affect business, future financial performance and results of operations
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Tata in collaboration with Nandan Nilekni and Vijay Kelkar announced launch of Avanti Finance

In recent past, Ratan Tata has invested in many unicorn technology start-ups, to add to his diverse portfolio, Avanti Finance is the venture in financial services, a dedicated microfinance NBFC. The venture is supported by Infosys veteran and technocrat #Nandan Nilekani and former Finance Secretary #Vijay Kelkar. Avanti Finance is expected to apply for registration to the Reserve Bank of India and will establish operations in this financial year. Avanti Finance, a microfinance set up is positioning itself as an affordable and safe finance company.

The company is meticulously planning to make processes technology driven lowering the operational cost, benefitting the end customers with lower borrowing cost. The company is targeting under-served and un-served segments of Indian population. 
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#Sovereign #gold bonds make a comeback for Indian investorswith 5th tranche on Sep 1, 2016

What is on offer

Govt.of India announced launching of 5th tranche of #sovereign #gold #bonds,hitting the market, issue opens on 1st September and closing on 9th Sept, 2016. The offer is strictly for Indian residents, institutions, university, charitable institution etc. The gold bonds are priced at Rs. 3150/- per unit, signifying 1 unit is equivalent to 1gm of #gold. One can apply for 1gm and maximum of 500 gms. The tenor of the bonds is 8 years with exit option 5th year option. It also earns interest of 2.75% on the initial capital investment payable semi-annually. The investment amount is protected upto the no of units and the eqivalent amount of the gold prices.

Also read – 



Why invest in Sovereign gold bonds?

1. It’s a paper form of gold, no issues of storage and safety
2. It earns you interest on the capital invested.
3. It can be used as loan collateral (Loan to value ratio to be maintained as guided by RBI)
4. It can be traded on demat format
5. Long term tax exempted on redemption

Disadvantages

1. Unlike GOLD ETF, it has moderate liquidity (cannot be sold as easily as GOLD ETF)
2. The premature transfer will attract capital gain tax
3. Only demat format can be traded, paper format will not be available for trading in stock exchanges.
4. Your bonds will be redeemed on maturity, while  in case of GOLD ETF, you can keep it as long as you want.
5.There is no guarantee of capital protection on the amount invested, only the units which will be protected, the redemption amount will be based on the prevailing gold prices.
6. Interest earned will be taxable as per taxation laws in india

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Term Life Insurance in India – essentials

Term insurance is the pure form of life insurance, wherein the policyholder pays a premium to cover his/her death risk for a particular sum of money for a particular term i.e.15, 20, 25, 30 years and so on . On demise of the policy holder within the term, the nominee (the beneficiary) is entitled to get the sum assured in lump sum or deferred manner as mentioned the policy contract. If the policy holder survives the term he is entitled to no payment/ #maturity benefits. This policy is highly recommended for the earning members of the family with dependants.
What is an ideal life insurance amount for you?
While choosing an ideal #insurance product, one need to do basic calculation of future monetary requirements based on the laid out financial goals, it cannot be a guess work.
Please write down the present costs you would incur for the following purpose
  • Elderly parents to look after
  • Present age of children and their future needs for education
  •  Do you have a working spouse? If not, her lifelong expenses on health and living

Though exact cost you may not be able to arrive at, please click to find the future costs (inflation) and expenses of education, marriage, living standards etc.Adding up these costs would help you arrive at the right amount, your ideal insurance cover. Still, if you are confused, multiply your yearly income with 10. This should be your ideal sum insured.
Ex – If your yearly income stands at 10 lakh, sum insured should be Rs. 1 crore.
What is the premium you need to pay for this insurance product?

The premium of a term insurance is calculated on few factors.
1. Age of the applicant – With each passing birthday you would need to shell out extra money as premium to buy a new policy, however, it remains the same through the term. So, early entry gives you a good deal. Buy a term plan before your next birthday to save on premium
2. Health of the applicant – It plays an important role too. Two persons of same age may get different quotes for premium depending on the medical history and current health of the applicant. 
3. Lifestyle – For example there shall be significant difference in premium for Smoker and a non-smoker of same age and health.
4. Policy term – You may chose the policy term depending on the offer and your needs, usually 10 -40 years, higher the policy term , higher will be the premium
The reasons why you should buy term Insurance is peace of mind. It buys you a adequate protection at a very low cost.
Parameters to chose the right insurance plan

For the same amount of sum assured, different insurers would quote different pricing. The points we should look at –

1. Inclusions and exclusions – This means, what are the exact conditions to be satisfied by the policy holders to receive the claim amount. Reason of death is one point insurers look at very closely for the payment of claims. Insurers may not cover unnatural deaths, suicide, death due to drug/alcohol etc.
2. Claim settlement ratio of the insurers – While comparing premiums, one must not ignore the CSR. It indicates the percentage of claims honoured on death of the policy holders in the particular year. A high percentage makes the insurers more dependable
3. Additional benefits – In addition to the basic life cover, insurance companies have added many additional features like accidental death benefit, permanent disability benefit, critical illness cover and deferred payment options to ease the burden of the policy holders

Tax Benefits on term insurance
On premiums paid and benefits received as per section 80C and 80D of Income Tax Act,1961.

Disadvantages of term plans
1. No maturity benefit on survival
2. Policy may lapse on not honouring 30days grace period for premium payment. And ou have to buy  new policy all together
Top insurance companies based on claim settlement ratio 2015-16
Insurance Provider
Death claims received
Claim settlement ratio
Death claims paid
Claims pending
Per  claim average value (Rs)
LIC
755,901
98.19%
742,243
0.5%
120,654
Max Life
9,223
96.23%
8,804
0.1%
278,816
ICICI Prulife
12,309
96.20%
11,546
0.8%
305,612
HDFC Std
12,189
95.02%
11,031
2.3%
238,890
SBI Life
14,876
95.70%
13,303
3.2%
229,572
Tata AIA Life
3,873
94.47%
3,659
1.0%
241,241
Star Union Daichi
1,266
94.08%
1,191
0.3%
285,306
PNB MetLife
2,466
92.90%
2,290
1.5%
448,821
Bajaj Allianz
20,661
91.30%
18,978
3.0%
183,291
Kotak Mahindra Life
2,686
90.73%
2,437
3.2%
296,143
AegonReligare
460
95.30%
413
0.2%
744,068
Top 5 basic online term insurance plans in India for #non-smoker, healthy female, age 30 years, Cover for 1 crore based on CSR, term and premium cost

Insurer
Policy Name
Policy Term
Premium
Max life Insurance
Online Term Plus plan
35 years
Rs. 8970/-
Aegon Religare
(No. of policies claimed is very less)
Aegon Life iTerm Insurance Plan
35 years
Rs. 8395/-
ICICI Prudential
iProtect Smart Lumpsum Plan
35 years
Rs. 11,900/-
HDFC Life
Click 2 Protect Plus
35 years
Rs. 11,630/-
PNB Metlife
Mera Term Plan-Full Lumpsum payout Plan
35 years
Rs. 9258/-

The chart data source: Policybazaar
Also Read – 

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Banking simplified with #Unified payment system #Cashless transaction

What is Unified Payment System #UPI
Cashless transactions in India to become more common with UPI, a recently launched smartphone based #payment system that lets money transfer and remittance service between bank accounts, merchant payments without divulging sensitive information like credit card numbers, #netbanking psswords, #IFSC codes. It can be used for bank transfers, bill payments, #merchant payments online and offline.
·         National Payments Corporation of India (NPCI) officially launched the facility for 19 banks.
How to get started
·         UPI app of banks will soon be available on Google Play Store for download
·         You only will need to get the app and install in your phone, set up the login details t create a virtual address
·         Add bank account details, Set M-Pin
·         Start transacting using UPI
·         UPI system will allow you to transfer funds safely and instantly as an SMS.
Use it for –
1. Bank transfer
2. Electricity/ phone/ credit card bill payments
3. Buying movie tickets/ railway/ airline tickets
4. Online shopping
5. Insurance premium payments
6. Donation
7. School fee
And replace many other cash payments
List of banks – #Andhra Bank, #Axis Bank, #Bank of Maharashtra, #Bhartiya Mahila Bank, Canara Bank, Catholic Syrian Bank, DCB Bank, Federal Bank, ICICI Bank, TJSB Sahakari Bank, Oriental Bank of Commerce, Karnataka Bank, UCO Bank, Union Bank of India, United Bank of India, Punjab National Bank, South Indian Bank, Vijaya Bank and YES Bank

News source: Livemint, BusinessLine
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Good news for the Indian investors, fewer bank representatives will push you to buy wrong insurance plans #ULIPs #bankassurance

Personal finance take on IRDA’s latest move on banning incentives to bank staffs

IRDA bans incentives to bank stuffs, #bankassurance

Impact –
1. To help lower misselling of insurance products by bank representatives. #bankassurance

2. The structure remains untouched for the other agents with 7% incentives over and above the commision.

3. The affect on the premium difference or anyother service differential is yet to be seen post this development.

The overall commision expenses have reduced over last decade, however, it still remains a costly affair for the investors.

The commision on sales still remains very high at 35-40% on the first year, 7.5% at the seond year and 5% for rest of the tenure, especially for the offline products

While online counterpart offers better pricing compared to these agent/ bank led products, one need to be careful to compare the exact offerings and the difference in benefits, if any.

#newsyoucanuse

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10 Reasons why you should avoid Endowment Insurance Plans and chose Term Plan instead

10 Reasons why you should not by endowment insurance plans, slide show#

Endowment plans (Life insurance product) especially made popular by #LIC since mid 20th century, are very popular products in Indian households because of its high pitch campaigns and rampant mis-selling by insurance agents. Due to limited knowledge on the return calculation and conservative mindsets for investments, Indian population often fall for this wealth eroding instrument. Let us at look what these insurance cum investments/ savings plans actually offer.

These plans offer a sum assured on the maturity and added bonus componen accrued over the tenure. It cover death benefit upto sum assured and additional bonus component upto the premiums paid by the investor till the tie of death. Though it sounds very simple, I have found atleast 10 reasons, we should avoid this age old dominant insurance product.

1. The premium is exorbitant compared to the assured returns

For an insurance cover of 1 lakh, endowment plan would cost about five thousand; a term plan would approximately cover you for 50 lakhs in the same amount (considering the applicant is 30 years old)

2. It doesn’t adequately cover risks
Sum assured compared to the premium is very low. Hence, people end up buying a very low coverage sum assured compared to the actual requirement

3. The returns are not comparable to the rising inflation
Thumb rule of investment is projected return should beat the inflation numbers. If you rightly calculate the bonus payment in addition to the sum assured, on maturity, the return is no more than a 4% y-o-y appreciation of the total investment, while India is fighting inflation at 6-8% in last few years.
This investment is actually eroding the capital  

4. Very high cost of investment
For a 10 lakh cover, it costs about 50,000 a year, while a Term Insurance plan would do the same for just 1 thousand

5. The allocation charges, expense break-up are hidden
Endowment plans in India doesn’t disclose the break-up of agent commissions, asset allocation charges, expenses, allocation for sum assured, death benefits etc, while in other investment products like #ULIPs, #mutual funds, it is mandatory disclose actual break–up   

6. It is a complex product Insurance + Investment and fails in both area  
To attract the attention of conservative investors who strive for capital protection at any cost, the category mixes two benefits, making it a poor product for both the needs, neither it is capable of providing adequate cover, nor giving any opportunity of wealth creation  

7. The Bonus component is the biggest joke, offers simple interest, missing out on the Power of compounding
The ‘BONUS’ element in the endowment plans is the biggest miss-selling point used by the agents. The Insurance Company announces a yearly bonus, this is not given to you yearly, is added to your sum assured kitty. But, the bonus component varies every year, and it doesn’t get accumulated as compound interest, it stays the same, without earning a single penny interest on it. So, for example in an 20 years policy, if you earned Rs. 5,000 in the 5th years as a bonus, it will remain 5000 till the 20th year, without earning any interest on the amount.  

8. The agents/ brokers push and miss-sell because, they get a high commission on this
There has been enough media bashing over high charges on #ULIPs, which #IRDA promptly lowered and capped the expense charges making it a bit better product for the investors. But, endowment plans charge as high as 40% of the premium in the first year, there are also high recurring charges attached to it

9. There is a requirement of pure insurance, keeping it clutter free
#Life Insurance is an important element of over-all financial planning. It is meant to cover life risk of a earning member in the family. It must cover atleast 3 times the annual income of the member, which ensures a financial cushion during a time of trauma and despair. A term insurance product is perfect answer for this. It has low cost structure and offers only death benefit and sometimes critical illness/ permanent disability cover for an additional cost. The premium difference between endowment and term plan is as huge as 80% which can be invested efficiently.

10. There are much better options available for wealth creation in the long term
The sentiment behind endowment plan is mostly having an extra income/ pension post retirement. But the product fails to deliver on the area because of its complex nature and high cost structure. If you are conservative investor also, you may consider dividing the remaining amount in two parts, one for monthly/ quarterly/ yearly PPF contribution (enjoys triple tax exemption benefit and return of 8-8.5% annually). The remaining part can be invested in Systematic Invest Plan (SIP) in a hybrid fund/ balanced mutual funds(about 60% equity 40% debt), will earn you over 12-14% annually over long term. [Note: When a mutual Fund invests 60% of its AUM in equity, it is considered to be an equity mutual fund for taxation purpose, and the return earned on the same over 1 year is exempted from taxation]
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Sovereign Gold Bonds or GOLD ETF. Which one is your cake?

  •      GOLD ETF thrives on high liquidity, can be converted into physical on 1 kg of gold, NRIs can invest too
  •        SGB offers interest on investment and capital gain tax exempted on redemption

Gold has been one of the oldest currency/ investment instrument world-wide. It is used widely as currency hedge, hedge against #inflation, and safe heven during various economic or political crisis. In India #Gold has a very special place. It is a popular investment choice among Indian households. However, the mode of investment is Jewellery and it is an emotional choice on rather than a well thought out investment choice, it is mostly bought as a wedding gift for the bride as “Stri Dhan” as it is referred.
There are many theories on the ideal exposure on this asset class, but no-one can deny that a portion of wealth should be kept in Gold, may vary from 10-20% of total portfolio, as its price tends to increase with the rise in the cost of living.
Jewellery, coins and bars – Asset with emotions attached
Though the asset class is important, investing in this has been a high-cost and difficult one. In Jewellery and gold bars, there many concerns like safety and storage, purity concerns and difficulty in trading. It also attract high taxation. It comes at a premium adding making charges in the range of 8 -25%, it my further vary depending on the seller.
GOLD ETF – Buy any day/ sell any day/ keep as long as you want
Last decade has seen a gradual but major shift in investors’ taste, with Mutual Fund companies offering GOLD ETFs and Gold FoF (Fund of Funds). GOLD ETFs are nothing but open-ended funds that trade on a stock exchange just like equity shares. Gold ETFs can be bought anytime like equity shares, can be bought anytime with minimum investment of 1 unit. Gold FOFs are predominantly used for SIP facility (monthly recurring investment) investing in Gold ETFs to accumulate Gold over a period of time. This is stored in dematerialised format, so no fear of theft or storage concerns. Though it comes under long term/short term taxation depending on the investment horizon, it doesn’t have any wealth tax attached. This is the most liquid form of Gold investment.  

NRIs can Invest in Gold ETF through trough exchanges with registered PINS account.
Gold Sovereign Bonds – Only form which pays interest
There is a new entrant in the market for investing in Gold, Sovereign Gold Bonds. Introduced in H2, 2015, bonds are issued by RBI in tranches on behalf of Government of India.
Sovereign Gold Bond Scheme, is an alternative instrument for holding Gold. Investors can simply apply through designated Banks/ PO/ NBFC and NSE brokers for investing in the SGB scheme in Paper/ Demat format. n a paper form through Sovereign Gold Bond Scheme. The under-lying asset for these bonds is Gold. These bonds will track the price of gold. The bonds also offer 2.75% interest income on the initial investment amount paid semi-annually to the investors. Minimum investment amount is equivalent to 1 gm of physical gold. 
The minimum tenor of the bonds are 8 years however, there is exit options  in 5th, 6th and 7thyear and it has a fixed tenor. The bonds are tradable in stock exchanges for those who holds the bonds in demat format. It doesn’t attract any capital gain taxes on redemption, however, interest pay out and early exit attract taxes as per long term/ short term gains.
Though the investment format is good, liquidity is low with exit option after 5 years with fixed tenor for maturity and the liquidity on exchange transaction remains to be seen.
So far in One year, Government of India has mobilised investment worth 2,292 crore Rs in four tranches in series I. Data shows no. of applications for the fourth tranche increased to 1.95 lakh from 62,169 in the first tranche. Despite these advantages, investors must note that liquidity in secondary market for sovereign gold bonds is yet to be seen.

The table intends to illustrate various aspects on the investment instruments.


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Investing in corporate bonds – A good debt investment option available for Indian investors

Debt Secondary market remains an unexplored category for Indian investors, though it is very popular globally. This post attempts to highlight few basics about bond investments
Fixed income like #Bonds, #NCDs remains least talked about subject, amongst the indian individual investors. Investors can invest in the primary market and stay put till maturity, as well as trade like equity/ shares. Infact, news reports indicates, bonds have yielded higher return compare to #Nifty or sensex in last one year.  There are two types of bonds traded in the debt market, Government securities (G-sec) and corporate bonds (Tax free bonds, NCD etc). G-Sec are considered to be the safest option with maturity ranging from 91 days (ultra short term) to 30 years (long term).
Corporate bonds are issued by banks, NBFC and corporates involve higher risks compared to G-secs, however they offer higher return comparatively.
When we talk about debt instruments (bonds, NCDs, CDs etc.) we come across terms like coupon rate, annual yield, yield to maturity etc. Let’s understand what is yield and how it is related to coupon rate and bond prices. Yield is annual return on the investment indicating in percentage term.

Analysing Bond investments in two scenarios – 1. Primary market 2. Secondary market. 

Primary market clearly defines that investors enter when the issue opens by the corporate.
For Example – In Primary market, a bond issued with face value – 100, Coupon rate 10%, minimum investment of 10 bonds, chosing annual payout option, Tenor 10 Years . Here the market value of the bonds will remain at Rs. 100 till the maturity. The yield to maturity(YTM) will be 10% = coupon rate since market value is the same as face value. Final payout will be bond price + interest accrued.

Secondary market –  Apart from the new bond issues, there are existing bonds in the market with higher yield, which investors can look at, but one need to understand that the two markets work differently and yield may vary significantly.The secondary market signifies trading in the already listed bonds.
Yield to maturity for secondary market investors – Case 1 – Bond traded at discount
Once the bond is listed on the exchanges, the bond prices fluctuate depending on the asking prices and volumes on the said trading day. The asking price of a bond move based on demand, supply and interest rate cycle. However, future payouts are pre-determined. Suppose, a bond is issued at a face value of Rs.100/-, with a coupon rate of 10% yearly, somebody invests Rs. 10,000 in the issue, the yearly interest payout remains at Rs. 1000 for the rest of the tenure. Incase, the bond prices fall to Rs. 90, still the coupon payout will be Rs. 10. So, now the same bond will be available at 9000 Rs. And, will still be able to fetch annual return of Rs. 1000, as the coupon payments on the bonds remain the same, so the annual return (or annual yield) is 11.1%.
In this scenario, the current bond price<issue price. Hence, it can be called as “discount”. One, who is investing in this situation, will get higher coupon pay out, i.e. higher yield. It may happen in the higher interest rate cycle, (the interest rate moves upward).   

Yield to maturity for secondary market investors – Case 2 – Bond traded at premium
In exactly opposite scenario, if the interest rates fall post the bond issue, the interest of the buyers increases the exiting bonds available in the secondary market, as they offer higher coupon rate, however, the buyer may need to pay premium as the askprice of the existing bonds with higher coupon rate move upwards due to increased demand. Now, if the bond price increases to Rs. 110, for 10,000 investment, coupon payout remains at 1000, and on the current NAV, the value of the investment will be 100*110 = 11000. This is a win-win situation for the primary market investor. However, in the secondary market, the coupon pay-out remains at Rs. 1000, against the bond price of Rs. 110. Hence the new investor is getting 9.09% interest pay-out, lesser than the coupon offered in the issue. If current bond price> issue price, it is said the bonds are sold at premium
Incase, there is no change in the ask price than the issue price, it is known as at par value(face value).

In the secondary market, yield-to-maturity includes coupon payment and the additional gain (bought at discount) or loss (if bought at a premium).

The points to be noted –
1. During the rising interest rate environment, investors can take advantage of the discount on the bond price, and enjoy the high yield as the coupon payout (interest payment) remains the same on lower cost of investment.
2. During the falling interest rate regime, the early investors can look at entering existing bonds with high yield option to capture a good yield, it may attract premium.
3. The liquidity in the instrument in the secondary market plays an important role. Size of the issue, investor interest, maturity date etc plays important role in the volumes. If the volumes are not adequate, one may need to wait or pay a premium.   
4. In secondary market, the bonds carry risks on interest rate,liquidity, credit and market risks
For trading in bond market you need to have a demat account. Please contact your share broker.  
You may check Investing answers YTM calculator to find approximate yield to maturity when you buy on secondary market.

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