The corporate bonds market should track the government securities market. Due to lack of fresh primary issues, the available good quality papers of 7-10 year tenors will be in demand.
Liquidity in the market is expected to high on the account of foreign exchange inflows. With no fresh good quality issues in the primary market available, there is expected to be good trading interest in the available good quality paper.
There were no fresh primary issues last week except for HDFC (Housing Development Finance Corporation) that tapped the market.
UTI bonds issued by Unit Trust of India for the US- 64 investors who opted to take the bonds instead of redeeming the units will start trading from Monday.
The five year bonds are transferable and tradeable in the secondary market with listing on the National Stock Exchange and the OTCEI. However the paper is not excepted to generate much trading interest as it is only available at the retail level in small lots.
Last week, trading interest was limited to a few counters like UTI bonds, oil bonds, and those of public sector undertakings and Reliance.
Interestingly, the spread between below AAA papers and comparable government securities has narrowed.
One such issue was NIIT that could raise funds at a spread of 85 basis points over the corresponding gilt as against 100 points spread earlier.
CPs listless
Commercial papers (CPs), on the other hand, hardly witnessed any new issues as dollar-denominated loans continued to be favourites with corporates to meet short-term demand.
Barring a few Mibor (Mumbai inter bank offer rate) linked non convertible debentures, the market was almost dull and dry.
