Issuers in listing mode

OUTLOOK/ Corporate bonds

Last week's story will continue this week too, with primary issues of various banks and public sector undertakings in the process of being sewn up.

However, this week, Housing Development Finance Corporation is expected to tap the market to raise Rs 400 crore through ten-year and 13-year papers carrying 5.90 per cent and 6 per cent coupons.

The spread between Triple A-rated five-year paper and corresponding gilt is currently hovering around 80-85 basis points.

Dealers said that the spread has steepened following the firming up of gilt yields. Consequently, tracking gilts, corporate bonds have also gone up.

Dealers said Punjab National Bank is also slated to hit the market but the modalities of this are not yet known.

While primary market is gearing up for activity, the secondary market remains dull as the underlying papers have all witnessed a rise in yields.

The uncertainty in the interest rate outlook is forcing players to remain liquid by investing in gilts "" and avoiding corporate bonds.

In fact, banks are in the process of paring their exposure to bonds.

Insipidity reigns in the CP mart

The commercial paper market is gradually seeing increased activity, both on the primary side as well as the secondary segment.

Tata Sons and Grasim have raised money through 91-day commercial paper.

Even though there is abundant liquidity in the system, some banks such as ICICI Bank and Kotak Bank have issued certificate of deposits.

The CP market has ceased to be active as most of the corporates can now raise funds through short-term demand loans.