Bond yields explained: How rising and falling yields affect investors and why interest in NCDs is growing

Bond yields determine the return an investor receives, expressed as a percentage, and they move inversely to bond prices. As the bond market expands heading into 2026, understanding this relationship is essential for both existing and new investors.

Bond prices and yields work in opposite directions. When yields rise, bond prices fall. When yields decline, bond prices rise. This inverse movement changes the value of bonds held by current investors and influences the returns available to new investors.

For existing bondholders, rising yields mean the fixed coupon payments on older bonds become less attractive compared to newly issued bonds offering higher returns. The investor faces a capital loss only if the bond is sold before maturity. On the other hand, when yields decline, the price