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Mumbai, Dec. 20

UTI BANK has been awarded the International Financing Review (IFR) Asia `India Bond House' for the year 2005.

The bank has been a consistent market leader for the last three years in debt syndication. This year, so far, the bank has done Rs 30,000-crore worth debt syndication and is likely to touch Rs 45,000-50,000 crore by the end of 2005-06, said Mr M.M. Agarwal, President, Capital Markets, UTI Bank.

In 2004-05, the bank had done Rs 27,000-crore worth of debt syndication.

UTI Bank offers the entire range of services in the fixed income market from project advisory, bond underwriting, and debt syndication to trusteeship. "There is great demand for credit this year," Mr Agarwal said. Some of the bond placed by UTI Bank include Food Corporation of India's issue of more than Rs 3,000 crore and State Bank of India's Tier-II issue of Rs 3,900 crore. Some upcoming issues include Krishnapatnam Port's around Rs 600 crore and Karaikal Port's around Rs 300 crore.

Major investors in bonds are insurance companies, mutual funds in short-term bonds, and provident funds because they cannot take loans.

Even banks would prefer investing in bond issues to giving loans, as bonds are inherently liquid.

The corporate bond market is, however, slowing because of the rising interest rates and the Reserve Bank of India's policy, which does not allow banks to show investment in corporate bonds as held-to-maturity. This makes banks susceptible to evaluation risk. Banks, which are the biggest market for corporate bonds, are wary of investing in them due to this clause, Mr Agarwal said.

"The way the economy has grown, corporate bond issues should have been higher", he said.

(This article was published in the Business Line print edition dated December 21, 2005)
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