Highly rated corporates gain Bond Street Cred
Mumbai: Spreads in the bond market have tightened significantly, with AAA-rated companies raising funds at some of the lowest rates seen in recent years, underscoring the demand for quality debt issues in an environment where yields are expected to soften after the latest change in the RBI’s monetary policy stance.
Yields on a 10-year AAA corporate bond are now below 7.20%, while the 10-year government security (G-sec) yields 6.82% on a semi-annual basis, or 6.94% annualised.
This has led to a narrow spread of just 15-20 basis points (bps), down from a typical spread of around 45-50 bps, with investors prioritising safety and issuer profile amid volatility globally in financial asset valuations.
One basis point is a hundredth of a percentage point.
“Spreads between government and corporate bonds have consistently narrowed in recent months, especially in the AA-rated and above categories, where most regulated investors are permitted to invest,” said Venkatakrishnan Srinivasan, Managing Partner, Rockfort Fincap LLP. “Demand from insurance companies, provident and pension funds, mutual funds, banks, foreign portfolio investors, and corporate treasuries is driving this trend as these investors look to lock in longterm AAA instruments.”
Stock Trading
Market 101: An Insight into Trendlines and Momentum
By — Rohit Srivastava, Founder- Indiacharts.com
Stock Trading
Algo Trading Made Easy
By — Vivek Gadodia, Partner at Dravyaniti Consulting and RBT Algo Systems
Stock Trading
Heikin Ashi Trading Tactics: Master the Art of
