Quiet week on the cards

It's that time of the year when companies will first work out their borrowing programme for the entire fiscal and only thereafter may they tap the bonds market.

As a result, the corporate bonds market is likely to be quiet this week, both the primary and the secondary segments.

In the secondary market there could be some trades by banks and mutual funds to build up a portfolio in the beginning of the year.

Thus they would get a good price for offloading their securities when the big players such as public sector banks start buying.

Commercial paper will continue to be used for meeting the short-term fund requirements till such time the corporates firm up their long-term borrowing programme.

Another reason for the commercial papers to be used is the growth in non-food credit and rising interest rates for long term funds raised through loans.

Recap: The number of commercial papers raised for the fortnight ended March 15 stood at 861 amounting to Rs 13,120 crore with interest rate ranging between 5.50-6.76 per cent.

The spread between a 5-year, AAA-rated paper and a corresponding government security ruled at 65 basis points. Meantime, HDFC raised Rs 325 crore for five years at an interest rate of 7.15 per cent last week.