Sudden spike in bond yield amid coronavirus outbreak signals trouble

Also, watch out for a company raising money at a very high rate of interest

With the lockdown affecting cash flows across sectors, companies are getting downgraded at a rapid pace. Hence, the risk that they may have difficulty in servicing their debt obligations in the future is rising. Retail investors, who invest in non-convertible debentures (NCDs), corporate fixed deposits (FDs), debt mutual funds and hybrid funds need to be cautious in this environment.  

Credit-quality pressures were building up already, and the pandemic made matters worse. “Even in the quarters prior to the lockdown, there were clear signs that growth would slow down. Even in FY20, the number of downgrades was much higher than the