The buoyant sentiment expected in the gilts market this week should rub off on corporate bond prices too.
As a consequence, yields on corporate bonds are seen easing by 5 to 7 basis points across the board.
Barring concerns over inflation, there are no negative factors affecting the trend. The twin-auction of long-dated gilts this week is expected to sail through. This will bolster the sentiment further.
At the far-end of the maturity spectrum (2012 and above) the yields look attractive.
This will spark good trading interest in the long segment, resulting in compressed spreads.
The spreads on corporate bonds over corresponding maturity gilts are likely to come down by about 10 basis points this week from last week
