Yileds may edge up
Yields on corporate bonds in the secondary market are expected to edge up as their spreads over gilts of corresponding maturity have come down drastically and look unsustainable at the current levels. AAA-rated five-year paper is currently quoted at a spread of around 80 basis points over a comparable government security as against 100-110 basis points a couple of months back.
In the last couple of days alone, yields on top-rated papers have come down by eight basis points as mutual funds, which received good inflows towards the quarter end, and primary dealers took fresh positions for the new quarter. Market interest will continue in AAA-rated papers that have residual tenors of five-to-seven years.
New issues
A clutch of public sector banks are entering the market for privately placing unsecured, non-convertible subordinated (Tier II) bonds.
Bank of India is expected to raise close to Rs 200 crore and Indian Overseas Bank and Oriental Bank of Commerce about Rs 100 crore each. Sardar Sarovar Nirman Nigam is also expected to tap the market with a Rs 300 crore tax-free bonds issue.
CP yields set to stabilise
Yields on commercial papers (CPs) in the secondary market are likely to stabilise at last week
