Call rates were range bound in the 6.30%-7.00% range through out last week amidst comfortable liquidity. The Exchange rate was also range bound in the predictable Rs. 48.88-95 / USD range. Forward premia shot up by 15-25 bps across the entire curve, with the 6 months premia trading up to 6.35%. OIS levels were also range bound with the benchmark 1 year OIS trading in the 6.75%-6.80% levels.
Government Securities
GOI Security prices were range bound with the benchmark 10 year rates ruling near the 7.25%-7.30% levels, throughout the week. The week opened with Rs. 6000 cr. auction of the new 15-year security. The cut-off was 7.49% with the oversubscription levels coming down as compared to the 2 earlier auctions this fiscal year. The RBI also announced the conversion of Treasury Bills Special Security to 7.37% GOI 2014 (Rs. 5000 cr.) and 7.49% GOI 2017 (Rs. 5000 cr.). Tbill cut-offs continued to be lower with the 91D Tbill cut-off at 5.82% and the 364D Tbill at 6.05%.
* All yields mentioned are annualized and spreads are over annualized GOI Securities.
Corporate spreads continued to be squeezes as the benchmark 5 year AAA spreads traded at 1.65-175 bps over GOI range. Even as the underlying GOI markets were dull and ended the week shedding 5-10 bps, the corporate absolute yields ended close to last week’s levels. CPs were issued in the 7.60%-7.90% range. In the private placement markets, Exim Bank (rated AAA) placed a 5 year paper at 8.38% annl.
Call rates are likely to be in the 6.50%-7.25% range with the exchange rates in the Rs. 48.85-95 / USD range. GOI markets are likely to be volatile especially as market participants take positions before the Credit Policy.
Coporate debt is likely to trade in the same 8.40%-8.50% annl. range for the benchmark 5 year AAA and CPs in the same 7.55%-7.75% range.
DISCLAIMER
The above views are based on the latest available information. Though the information sources are believed to be reliable, the information is not guaranteed for accuracy. While the views are proffered with the best of intentions, neither the author, nor the firm are liable for any losses that may occur as a result of any action based on the above. The financial markets, and especially the Indian money markets, are illiquid and inherently risky and it is assumed that those who trade these markets are fully aware of the risk of real loss involved.
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Call rates are likely to be in the 6.50%-7.25% range with the exchange rates in the Rs. 48.85-95 / USD range. GOI markets are likely to be volatile especially as market participants take positions before the Credit Policy.
