• Investment World
• eWorld
• Brand Line
• Mentor
• Life
• Canvas
• Praxis
• Urban Pulse
• Brand Quest
• The New Manager

Stocks

• Quotes
• SE Diary
• Scoreboard
• Open-End Mutual Fund

Cross Currency

• Rates
  
  

Shipping

• Ports
  
  

Archives

• Yesterday
• Datewise
• Resources
• In Focus
• In Depth

Group Sites

• The Hindu
• The Hindu ePaper
• Business Line
• Business Line ePaper
• Sportstar
• Frontline
• The Hindu eBooks
• The Hindu Images

Elina Mohanty

Mumbai , Jan. 5

Corporates are raising funds at interest rates higher than government borrowings.

Investors in corporate bonds could earn higher yields, though for companies, it could be a costly proposition.

According to Crisil, the yield differential between a 10-year triple A-rated corporate bond and a 10-year government security (annualised yield at 7.70 per cent) is around 160 basis points, while that between a 5-year triple A-rated corporate bond and a 5-year G-sec (annualised yield at 7.30 per cent) is around 120 basis points.

The one year triple-A-rated corporate bond is currently trading at 9 per cent, 3-year triple-A-rated at 9.10-9.20 per cent, 5-year triple-A-rated at 9 per cent and 10-year triple-A-rated at 9.30 per cent.

"It is basically a flat curve and there is an inversion in the short and medium tenures," said Ms Rama Vasantharajan, Head - Fixed Income Research, CRISIL. "There is a short-end liquidity crunch as the second phase of CRR hike will drain out Rs 6,750 crore on Saturday," she added. "The demand is high for PSU and SLR 5-year and 10-year corporate bonds," she mentioned.

BSE has recently introduced a reporting platform on which trades in corporate bonds can be reported. The platform is linked to the BSE Web site. The move helps in price discovery, say dealers.

"Earlier, deals in the corporate bond market were entirely private," said Mr N. Muthuraman, Head-Crisil ratings and Product Development Criteria.

Related Stories:
Call rates on the rise, touches 20 pc
Call money rates zoom to 12.75%
Large corporates not affected by interest rate hikes

More Stories on : Financial Markets | Corporate Bonds

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
India, Italy see scope to expand trade

Copyright © 2007, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line