Spread between corporate, G-Sec, bonds narrow as liquidity improves

FPIs have been complaining about restrictions on investments put on debt issuance, but the government removed those in September, as rupee was depreciating

The spreads between the highest-rated corporate bonds and government bonds have started narrowing as liquidity in the system improves. But, it will take some time to return to normal, said bond dealers.

Currently, the spreads between the 10-year G-sec and AAA papers is about 100 basis points; a year back it was 50-60 basis points, its normal level. The one-year bond spread between the two is about 140 basis point, from about 70-80 basis points, its normal level.

New Reserve Bank of India (RBI) Governor Shaktikanta Das is meeting industry representatives, as well as representatives of banks, non-bank financial companies,