Surge likely in CP issues

CORPORATE BONDS

A number of banks, including State Bank of Bikaner and Jaipur, are expected to float tier-II bonds this week. The secondary market, in tune with government securities, is likely to see brisk trading.

Dealers said as the auction slated for next week concludes the government's borrowing programme for this fiscal, a rally is foreseen in government security prices.

Corporates continue to issue commercial papers to meet their short-term fund requirements. With the yield on the 91-day treasury bill coming down from 5.30 per cent to 5.22 per cent, corporates are expected to issue more commercial papers.

Corporates had issued 1,624 commercial papers amounting to Rs 12,215 crore in the fortnight ended January 15. The current interest rate on commercial papers is ruling in the 5.40-6.35 per cent range.