Corporates usually wait for RBI rate decision before bond offers. Not this time
Subscribe to enjoy similar stories. Mumbai: Bond issuers have flooded the market with long-term paper ahead of the 5 December Monetary Policy Committee meeting, breaking from past trends amid uncertainty about a rate cut, a weakening rupee, and a high supply of central and state government debt. Over the past two weeks, financial institutions such as Axis Bank Ltd, Power Finance Corp., Canara Bank, ICICI Bank Ltd, Indian Railway Finance Corp, and ICICI Prudential Life Insurance Co.
have issued bonds with a tenure of 10-15 years, collectively raising around ₹19,600 crore. “Market participants are wary of whether the yields will come down or not post policy," said Venkatakrishnan Srinivasan, managing partner at Rockfort Fincap, a fixed-income institutional advisory firm. “Of late, participants tend to discount the policy outcome well before the policy based on research and expectations.
When the policy is broadly in line with expectations, yields often inch up slightly, which is why several large regular issuers prefer to tap the market ahead of the policy." Typically, the period before the MPC meeting sees muted bond issuances as issuers prefer to wait till after the policy outcome to tap the market. While economists and analysts are divided on the MPC’s stance in Friday’s decision, there is no possibility of a rate hike. In a normal situation, that implies issuers stand to benefit from lower yields even if the rates remain unchanged.
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