PSU Bonds 2026: REC, PFC, NHAI – How to Evaluate and Buy the Best Deals
Why PSU Bonds Deserve a Place in Every Fixed Income Portfolio
PSU bonds offer a compelling risk-reward for fixed income investors: yields 80–150 basis points above G-Secs, near-zero default risk (implicit government backing), and regular semi-annual interest payments. For investors in the 20–30% tax bracket, PSU bond yields of 8–8.5% provide 5.6–6.8% post-tax returns — often better than bank FDs net of tax.
Top PSU Bond Issuers and Their Mandates
| Issuer | Ministry/Department | Business | Why Low Risk |
|---|---|---|---|
| REC Limited | Power Ministry | Loans to power sector utilities | Govt shareholding 52%+; policy support |
| PFC | Power Ministry | Loans to power sector | Same as REC; sister organisation |
| NHAI | Road Transport Ministry | Highway development | Revenue-backed; sovereign guarantee |
| IRFC | Railway Ministry | Lease finance for Railways | 100% Govt owned; railways pay lease |
| NaBFID | Finance Ministry | Infrastructure finance | New DFI with Govt backing |
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How to Evaluate PSU Bond Quality
- Credit rating: Minimum AAA from CRISIL, ICRA, or CARE. Never buy below AA+ for PSU bonds
- Issuer’s financial health: Check NPA ratios (for lending PSUs like REC, PFC) — under 4% is comfortable
- Government holding %: Higher government stake = stronger backing signal
- Yield vs maturity: Compare yield to equivalent G-Sec to check if premium is adequate
- Liquidity: Check daily trading volume on NSE debt segment — thinly traded bonds have wide bid-ask spreads
Where to Buy PSU Bonds
- NSE/BSE debt segment via Lemonn demat account (secondary market)
- RBI Retail Direct for some government-guaranteed bonds
- Primary market via bank bond applications during new issuance
- Debt mutual funds: Lemonn’s mutual fund platform for PSU debt fund SIPs
Tax Planning with PSU Bonds
Interest from PSU bonds is taxed at slab rate — same as FDs. However, if you buy PSU bonds at a discount (below face value in secondary market), the difference at maturity is taxed as capital gains (12.5% LTCG after 24 months). This can be more tax-efficient than interest income for investors in the 30% bracket.
Disclaimer
The stocks mentioned in this article are not recommendations. Please conduct your own research and due diligence before investing. Investment in securities market are subject to market risks, read all the related documents carefully before investing. Please read the Risk Disclosure documents carefully before investing in Equity Shares, Derivatives, Mutual fund, and/or other instruments traded on the Stock Exchanges. As investments are subject to market risks and price fluctuation risk, there is no assurance or guarantee that the investment objectives shall be achieved. Lemonn (Formerly known as NU Investors Technologies Pvt. Ltd) do not guarantee any assured returns on any investments. Past performance of securities/instruments is not indicative of their future performance.
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