Corporate bond issuances seen picking up in fourth quarter
Corporate bond issuances seen picking up in fourth quarter
As stability is expected in interest rates, corporate bond issuances through private placement are seen picking up in the fourth quarter. The rise in issuances may be close to 25% compared with last quarter. Issuances slowed down in mid-July when the Reserve Bank of India (RBI) resorted to a host of measures to tighten liquidity in a bid to arrest volatility in rupee.
Consumer Price Index (CPI) inflation has already eased and Wholesale Price Index (WPI) inflation for December may also ease due to which RBI may resort to a pause in key policy rates in the third-quarter monetary policy review to be detailed later this month. This could result in coupon rates falling from current levels. Besides that the borrowing programme of the government is expected to be completed in the first week of February due to which traders will have appetite for these corporate bonds.
"Some revival in corporate bond market is possible. The issuances went down earlier this year due to uncertainties in the bond market post mid-July due to liquidity tightening measures of RBI. At that time bank finance was available much cheaper compared with corporate bond market. Looking at the way inflation is expected to pan out and the way yields are moving, we may see some appetite from investors for these corporate bonds," said Siddharth Shah, vice president, STCI Primary Dealer.
Recently IDFC raised funds by way of private placement of corporate bonds by issuing 10-15 year paper with a coupon range between 9.65-9.70%. Corporate bond yields are seen falling further from current levels in the days to come.
"Softening in corporate bond yields will happen this quarter, but it may not be much. Significant drop can be expected only if there is change in monetary policy stance," said Dwijendra Srivastava, head of fixed income, Sundaram Mutual Fund. According to Srivastava reissuances and rollover demand for corporate bonds will be there and the rise in issuances may be about 20-25%. Fresh issuances may be lesser because the economy is still reeling through slowdown due to which even bank credit growth is sluggish.
The yield on the 10-year "AAA" public sector undertaking corporate bond ended at 9.54% while the 5-year tenure ended at 9.85% on Monday.
As per data from Securities and Exchange Board of India (SEBI) corporate bond issuances through private placement stood at a little over Rs 59,000 crore in the third quarter ending December 31. But this is a drop of 29% compared with the same quarter the previous fiscal.
Source Business Standard
Thanking you
Regards,
Rajesh Kumar Kathpalia ¤ SMC Global
17,Netaji Subhash Marg,Daryaganj,
New Delhi-110002 Mobile No 9891645052
Email Id: rajesh.ipo@smcindiaonline.com
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As stability is expected in interest rates, corporate bond issuances through private placement are seen picking up in the fourth quarter. The rise in issuances may be close to 25% compared with last quarter. Issuances slowed down in mid-July when the Reserve Bank of India (RBI) resorted to a host of measures to tighten liquidity in a bid to arrest volatility in rupee.
Consumer Price Index (CPI) inflation has already eased and Wholesale Price Index (WPI) inflation for December may also ease due to which RBI may resort to a pause in key policy rates in the third-quarter monetary policy review to be detailed later this month. This could result in coupon rates falling from current levels. Besides that the borrowing programme of the government is expected to be completed in the first week of February due to which traders will have appetite for these corporate bonds.
"Some revival in corporate bond market is possible. The issuances went down earlier this year due to uncertainties in the bond market post mid-July due to liquidity tightening measures of RBI. At that time bank finance was available much cheaper compared with corporate bond market. Looking at the way inflation is expected to pan out and the way yields are moving, we may see some appetite from investors for these corporate bonds," said Siddharth Shah, vice president, STCI Primary Dealer.
Recently IDFC raised funds by way of private placement of corporate bonds by issuing 10-15 year paper with a coupon range between 9.65-9.70%. Corporate bond yields are seen falling further from current levels in the days to come.
"Softening in corporate bond yields will happen this quarter, but it may not be much. Significant drop can be expected only if there is change in monetary policy stance," said Dwijendra Srivastava, head of fixed income, Sundaram Mutual Fund. According to Srivastava reissuances and rollover demand for corporate bonds will be there and the rise in issuances may be about 20-25%. Fresh issuances may be lesser because the economy is still reeling through slowdown due to which even bank credit growth is sluggish.
The yield on the 10-year "AAA" public sector undertaking corporate bond ended at 9.54% while the 5-year tenure ended at 9.85% on Monday.
As per data from Securities and Exchange Board of India (SEBI) corporate bond issuances through private placement stood at a little over Rs 59,000 crore in the third quarter ending December 31. But this is a drop of 29% compared with the same quarter the previous fiscal.
Source Business Standard
Thanking you
Regards,
Rajesh Kumar Kathpalia ¤ SMC Global
17,Netaji Subhash Marg,Daryaganj,
New Delhi-110002 Mobile No 9891645052
Email Id: rajesh.ipo@smcindiaonline.com
--
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