Zero-coupon bonds struggle to retain investor demand amid mkt trend shifts

Zero-coupon bonds (ZCBs), also known as deep-discount bonds that do not guarantee periodic interest payment, are struggling to retain the investor demand seen in the second half last year. 

Monetary-policy easing, an abundant liquidity infusion, and a cut in the cash reserve ratio (CRR) cut by the Reserve Bank of India (RBI) in the recent monetary policy review weighed on bond yields, particularly those of short-duration bonds. 

The yield spread between the three-year government bond and the benchmark 10-year bond has increased more than four-fold to 61 basis points (bps), as against 15 bps at the start of the financial