PSU Bonds List: Top Performing Public Sector Bonds in India
A few years ago, I opened my portfolio dashboard on a volatile Friday and realised something simple: I slept better on the weeks when my interest cheques arrived. That was the nudge I needed to invest in bonds with a clearer strategy. Since then, Public Sector Undertaking (PSU) bonds have become the quiet, steady core of my fixed-income allocation. Here’s how I look at them—and how you might use a PSU bonds list to choose sensibly.
Why PSU bonds clicked for me
PSU issuers are government-backed companies—names we encounter in everyday infrastructure: power, railways, highways, finance. That visible public purpose matters. It translates into stronger governance, better disclosure, and usually higher credit ratings. I don’t chase the last rupee of yield; I prefer predictable cash flows from institutions that must meet obligations through cycles. PSU bonds gave me that balance—credible issuers, reasonable yield, and tradability on exchanges when I want flexibility.
What I screen before buying
My filter is practical, not fancy:
- Credit quality: I start with AA+ and AAA where possible. A high rating doesn’t guarantee perfection, but it narrows surprises.
- Tenor & cash flow: I match maturities to real goals—fees due in three years, a home down payment in seven. Staggering maturities (a simple ladder) has helped me avoid forced selling.
- Coupon structure: Annual or semi-annual interest affects cash planning. Step-up or floating coupons can be useful when rate paths are uncertain.
- Liquidity: I check traded volumes. Being listed is good; being actively traded is better.
- Pricing vs. yield: A small premium or discount at purchase changes realised return. I run the numbers; the sticker price alone can mislead.
Reading a PSU bonds list the way I do
A generic PSU bonds list is only a starting point. I annotate it. For instance:
- REC Ltd.—solid track record in power sector financing; often offers competitive yields at high ratings.
- NHAI—aligned to long-dated highway projects; suits investors who prefer longer tenors for locking rates.
- PFC—diversified borrower base within energy, typically strong coverage ratios.
- IRFC—exposure to the railways ecosystem, where funding needs are structural and long term.
These names move in and out of favour as rates shift. I revisit the list quarterly, not obsessively, just enough to catch better entry points.
Taxes, risk, and the “sleep test”
Interest is taxed as per my slab, so I don’t ignore post-tax yield. That said, even after taxes, the trade-off for stability has been worth it in my mix. Risk still exists—rate risk (prices fall if yields rise), reinvestment risk on coupons, and the slim but non-zero credit risk. I manage these, not by prediction, but by position sizing and tenor diversification. If a bond position fails the “sleep test”—if I’d worry about it through a bad quarter—I downsize it.
How I actually invest in bonds
My process is boring by design. I shortlist from a PSU bonds list, compare current yields and accrued interest, and place orders on a regulated platform with transparent settlement. I keep notes on why I bought—rating, yield at purchase, goal matched. When the market swings, those notes stop me from reacting to noise.
The takeaway I’d offer
If you want stability without abandoning return discipline, PSU bonds deserve a seat at the table. They won’t headline your portfolio, and that’s the point. Start small, invest in bonds that fit a goal, and let the interest payments do their quiet work. Over time, that calm compounds—just as reliably as the coupons.