Indian-Finance:Updation7th Oct.16:7.5% Rs.1500 Bond issue by HDFC Ltd.:Determination to Develope Corporate Bond Market: RBI Policy DT4.10.16 Booster dose to Strongest Indian Bond Market in Last Twenty years:

Repo Rate cut is positive for Bond yields & increase in treasury profit. Ensuring reversal of Market to Market Losses. 


Highlights of latest SEBI permissions providing relaxations as under:-

• FPI's to Trade directly in Bond Market bypassing Brokers.
•  Investment of Real Estate Investment Trusts(REIT) upto 20% in under construction Assets:
• Investment in Infrastructure Investment Trusts(InviTs):
• No restriction on number of Sponsors for REIT & InviTs
• Foreign Investors-Banks,Insurance & Depositories: to hold upto 15% in Indian Stock Exchanges.

Sep.23,2016:Now Global Funds r returning to Indian Debts.Slowing Inflation& Lower Current Account deficit has helped.In Current Quarter Rates on 10year Bonds reduced by56 basic points.

Aug.26,2016:

• An overhaul of the country’s Debt market. 
• Benefit both debtors and creditors, & global investors including pension funds a chance to earn yield.
• Higher Compensation wouldn’t necessarily involve extra risk. 
• Since yr.2000The $22 billion(Rs.14740/-Crores @Rs.67/-) of Rupee-denominated Bonds issued in Domestic market by  A-rated companies .
• Banks to offer credit enhancements up to 50% of an issue(20% at present)-  Increase in limit of Partial Credit Enhancement(PCE). Chances of increase in Rating of  debentures may become AA.
• Indian companies Coupon rates >10% to borrow for three years.  Higher Bank processing fees for Credit Enhancement.
•  Banks permitted to raise Rupee Funds Overseas asTier 1 Capital Coupons Called Masala Bonds 
• Helping to reduce Cost for Lenders having sufficient profit Reserves to Service Coupons. 
• RBI wants  reduce Bank's exposure to Large Corporate Borrowers(LCB). From April 2019 & Exposure to any One group of companies can’t exceed 25% of Tier 1 capital.
•  Open up Corporate bond market would lead to More Trading and Liquidity in Securities. Large corporates would be Raising Money from Bond Markets, 
• Credit Enhancement Limits have increased.
•  It is growing the Customer base & increasing Revenue from Existing Customers. 
• Refinancing issuance Large Borrowers specially in Infrastructure getting higher credit enhancement: They would get  access the Bond Markets.
• Bond market is certainly cheaper for Large Borrowers raising money from Banking sector & from Bond Market.
• BASEL II guidelines,  clearly said that there is a 150 percent risk weight for rated entities ‘BB’ and below. 
•  In fact RBI has said that those entities which had never got a rating done, there is a time up to June 30 2017 for them to get the rating done and come into the mainstream.  So, the banks will then apply 150 percent risk weight whereas those who are currently rated and suddenly became unrated for whatever reasons, all of them will be applicable at 150 percent risk weight. So, this is a very strong measure taken by RBI to plug a particular anomaly and correct the situation immediately.  last two to three years slowdown has created some incentives for people to go out of the ratings space.  That is the first and foremost important gap that seems to be plugged by the RBI with immediate effect. 

•       Debt market reforms to simplify participation and enhance liquidity, besides allowing the use of newly-introduced instruments such as Masala Bonds.
•   Allowed market making in Government Securities (G-Secs),
•  Accepted Corporate Bonds as eligible collateral under its Liquidity Adjustment Facility(LAF)
• Removed the 7-day restriction for lending by listed companies in G-Sec market repo,
• Introducing the electronic platform for corporate bond repos. Permitting Brokers in Repos of Corporate Bonds will make the market more liquid,”
•     Foreign Portfolio Investors (FPIs) would be allowed access through primary members to its NDS-OM 
• NDS-OM-an electronic platform owned by the RBI where secondary market trading in G-Secs is done),
• .       Allowing  Direct Access to the Corporate Bond market sans brokers.
• Covered three important aspects of the bond market: Development, Instruments and Players.
• To improve retail participation in G-Secs, remove the remaining restrictions on seamless transfer of G-Secs between depositories and itself. 
• Beneficial as retail investors with demat accounts have recently been allowed to trade directly on the NDS-OM.

B.Infra, housing boost

• To boost financing of infrastructure and affordable housing, RBI has proposed to allow banks to 

• issue Additional Tier-1 bonds in the form of perpetual debt instruments,

•  besides allowing issuance of Tier-2 bonds.

• 2.       Guidelines for raising the ceiling of partial credit enhancement from 20 per cent of a bond issue to 50 per cent to enable issuers with weaker credit ratings to access the bond markets. “This would enable more money flow into infrastructure lending,”

July5,2016
 The Short Term Instruments are quoted at lowest Like:-

1. 91days Treasury Bill 6.50%
2. Now Call Money Rate is below 6% 
3. Net Core Liquidity  Requirement Surplus Rs.10000/- Crore Plus

The above positive outlook in Coming days may result in reduction base rate of various Banks. Subject to continuous Foreign Fund inflow and NRI deposits.Arranging Funds from Open Money Market is now cheaper:

April5,2016

1. The RBI cut the repo rate by 25 basis points to 6.50 percent - the lowest since January 2011, 
2.  RBI also raised the reverse repo - or the

rates lenders charge to the central bank - by 25 basis points to 6.0%.

The moves attempt to a fine balancing act: injecting enough liquidity, while ensuring banks have enough incentives to place surplus cash with the RBI.

• Mr Raghu Ram is Slow, Steady and at the same time very alert. 
• He is having very Good Grasp of the Subject and have taken Comprehensive view of all Economic Factors before  announcing the Policy
• Closely Monitoring and Evolving Inflation Trend. Hence he is telling that Whole Sell Price Index is not complete and have completely left effect of Services Sector on overall Economy.
• Very Clear in his mind to keep overall inflation to 6%+-

February 1,2016

• The price of the Indian basket of crude oil, which was a little over $40 a barrel in the first week of December, has now dropped below $25 a barrel, its 13-year low.

• In the first three quarters of 2015-16, Indias fiscal deficit remained
  
  at 87.9% of the full-year target, signalling better fiscal management.
  It is fairly certain that for the current financial year, it will be
  kept at 3.9% of the gross domestic product, but will the government be
  able to stick to its target of keeping it at 3.5% in 2017? 
  
   RBI had been pumping rupees into the system, buying bonds from
  the banks through the so-called open market operations or OMO. From 2013
  till last year, the central bank was buying dollars from the market and
  adding to Indias foreign exchange reserves. 
  
  Clamour for a CRR cut
  It needs to pare banks cash reserve
  ratio (CRR) of the portion of deposits that commercial banks are required to keep with the central bank, bring it
  down to 3.75%. This will release about Rs.23,000 crore into the system.
   they do not earn any interest from the deposits kept with RBI.
  
  Debt of Power Companies
  Another big issue staring at the banking system is the Rs.4.3 trillion
  debt restructuring of power distribution companies or discom under the
  Ujwal Discom Assurance Yojana or UDAY. Three-fourths of the debt is to
  be converted into bonds, backed by state government guarantees  held to maturity or HTM
  category, a status that only the government bond enjoys. RBI can give
  this status to infrastructure bonds with at least seven-year maturity.
  To make the UDAY scheme a success, the central bank may have to do this.
  
  I invite reader's Suggestion on above Writing/ on Mobileno.7228805981: ashok.agarwal8@gmail.com