To boost repo trading in corporate bonds, the board also approved the proposal to facilitate setting up of a limited purpose repo clearing corporation.
Even as FCI is raising Rs 75,000 cr for three months at 4.69%, companies are regularly tapping bond market for the same tenure at as low as 3.2%, way lower than RBI's repo rate of 4%
The yields of some prominent companies are still at very high levels and high net-worth individuals and family offices, who are lapping up these bonds at very attractive rates, are reaping the benefit
Move aimed at improving transparency and price discovery
Yields have dropped and the spreads have compressed despite foreign portfolio investment outflows of around $3 billion from corporate bonds in 2020, says article
Sitharaman announced a special liquidity scheme of Rs 30,000 crore for NBFCs, housing finance companies (HFCs) and MFIs, which are finding it difficult to raise money from the debt markets.
The dip was also due to low demand for investment, as capacity utilisation remained stagnant in the Indian economy
According to him, interest rates will go down further, but banks must pass them on to companies.
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The 10-year bond yields closed at 6.38 per cent
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The spread between the 10-year AAA-rated corporate and equivalent maturity government bonds have fallen to 108 bps
Sebi has also suggested that NBFCs create charge on the identified assets for every bond issue
Inflows into corporate bonds dropped to Rs 5,359 crore from Rs 6,717 crore
In her second Budget presentation, the finance minister said certain government securities will be open for foreign investors
Companies have sold a record $2.44 trillion so far this year across currencies, surpassing previous full-year records
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FPIs have been complaining about restrictions on investments put on debt issuance, but the government removed those in September, as rupee was depreciating
The development comes close on the heels of broader moves to better supervise corporate bond pricing
Yatin Shah, co-founder and executive director of IIFL Wealth Management Ltd., expects the spreads to correct within 4-6 months as the "bit of panic" settles down