Mumbai: No issues are expected to hit the bond markets this week as firms stay on the sidelines ahead of next week’s policy review and after the central bank raised banks’ reserve requirements unexpectedly last week.
The Reserve Bank of India (RBI) raised banks’ reserve requirements by 50 basis points last week, and said the move would drain Rs185 billion from the banking system.
“Issuers are waiting for the policy cues and we may see some issues next week,” a merchant banker said.
Energy firm Tata Power’s bond sale to raise Rs3 billion attracted Rs5 billion in bids and the company has kept the entire amount.
The bond has a 10-year bullet maturity and it was sold at 10.1%, the upper end of the book-building corridor band.
The issue was rated “AA” by Crisil and Icra, and Standard Chartered Bank was the sole arranger to the issue.
The central bank is scheduled to review monetary policy on 29 April and some analysts expect it to hold fire amid slowing growth while others expect it to raise its lending rate to stem inflationary pressures.
At 12:30pm, total volume in corporate debt on all the three trading platforms totalled Rs816 million compared to Rs13.85 billion in government debt.
India’s corporate bond market remains underdeveloped despite a fast growing economy and a rapidly transforming financial sector, the Asian Development Bank said in a report released on Wednesday.
The yield on Reuters’ benchmark five-year corporate paper was at 9.63% on Wednesday, widening from 9.5% last Tuesday.
The spread between the five-year corporate and government debt was at 139 basis points on Wednesday, above 133 basis points last Tuesday.