Corporate fixed deposit (FDs) popular among investors who want fixed returns that are slightly higher what bank FDs give, even at a slightly higher risk.
However, just like FDs, interest payment on corporate FDs is fully taxable at your income tax slab rate, so factor in the post-tax returns.
Mint does not recommend corporate FDs, to an average investor because of the risk involved, But if you like to invest in them, nevertheless, you must minimize the risk by choosing issues with high ratings.
An AA rating indicates that the degree of safety regarding timely payment is stronger, the higher the rating, the better the capacity of the issuer. Also, make sure the terms for premature redemption are not very stringent.
Here’s a list of corporate FDs that are rated AA and above.
