Icici Reduces Yields

Term-lending institution ICICI has cut the yields of various instruments under its Safety Bonds -- except the Children Growth Bond -- by 10-50 basis points (bps).

This is the institution's second issue of Safety Bonds in this fiscal. The issue, which will remain open from July 16 to August 4, has five options: Tax Saving Bond, Encash Bond, Regular Income Bond, Money Multiplier Bond and Children Growth Bond.

The yields-to-maturity (YTMs) of the Encash Bonds -- five-year instruments with annually payable interest rate -- will be 50 basis points lower than those in the earlier issue. Thus, in this issue, the YTMs for the Encash Bonds are: 9 per cent, 9.1 per cent, 9.2 per cent, 9.4 per cent and 9.6 per cent, respectively, compared with 9.5 per cent, 9.6 per cent, 9.7 per cent, 9.9 per cent and 10.1 per cent in the last issue.

The YTMs of all the options of Regular Income Bond were also reduced to 9.7 per cent, 9.7 per cent and 9.8 per cent compared with 10 per cent, 10.1 per cent and 10.25 per cent in the last issue.

The term-lending institution has reduced the YTM of the first option of Money Multiplier Bond, which has a maturity period of 5 years and 4 months, by 20 basis points to 9.5 per cent. However, it has kept the YTM of the second option of the bond, which has a maturity period of 7 years and 2 months, at 10.2 per cent.

The YTMs of the Children Growth Fund were almost kept unchanged. The YTM of first option of the bond, which has a maturity period of 16 years and 5 months, was kept at 10.3 per cent. And that of second option, which has a maturity period of 21 years, was kept at 10.4 per cent.

The yields of the Tax Saving Bond, which has two options in this issue, was absent in the first issue. The first option of the bond, which has a maturity period of 3 years, bears a YTM of 18.5 per cent, while the second option has a YTM of 16.7 per cent.