Govt Likely To Issue Medium-Term Bond
The government is likely to issue a medium-term bond to mop up liquidity and take advantage of lower interest rates, dealers said.
"They may possibly issue a six-year paper," said the head of money markets at a foreign bank.
He said there was a dearth of bonds maturing in 2003. "The trend seems to be to pick up as much money as possible in a low interest scenario," said Roopesh Pathania, a money market dealer at Barclays Bank in Mumbai.
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The government has already completed over 40 per cent of its borrowing target for 1997-98 (April-March), taking advantage of easy liquidity and afalling interest rate regime.
"There is lot of unsatiated demand in the market," said R Narayan, Assistant manager treasury)at Bank of Nova Scotia.
The premium on the 12.59 per cent 2004 bond issued on June 17 was proof of the market's appetite, he said. It received applications for over Rs 5000 crore against a target of Rs 2000 crore.
This bond was quoted at Rs 101.40 on Monday.
Dealers said the next bond could be of six-year maturity as there were several papers maturing in both 2002 and 2004.
The abundant liquidity will be manifest in oversubscriptions at bond issues, dealers said.
"They may possibly issue a six-year paper," said the head of money markets at a foreign bank. He said there was a dearth of bonds maturing in 2003.