Investment Strategy With higher uncertainty in debt and equity markets, this would be the time to review asset allocation and manage risk. There is now an opportunity to construct a layered debt portfolio. A phased transition out of ultrashort-term funds into high-quality accrual funds may be warranted. Policy Highlights…
New Instruments Both SEBI and RBI will request larger companies to finance 25% of their borrowings from the market. Bond issues for the bank recapitalization, affordable housing, NHAI’s infrastructure projects can be expected. The government has indicated that a debt ETF will be launched similar to what was done…
Debt as an investment avenue is regarded as a safe choice. The risks in debt markets are not immediately obvious. Yields have moved sharply this month, and volatility in debt markets continues. But, what role do risk and volatility play in debt markets?
Over the last 18 months, an unusual trend has been observed. There has been a swift and steady outflow of capital from fixed deposits into balanced funds. Fixed deposit investors have always looked towards avenues that offer fixed returns and guaranty protection of capital. Balanced funds promise neither. So, how…
Interest Rates & Yields 2017 opened with expectations of continuing in the trajectory of falling interest rates. However, RBI took the markets by surprise by shifting the monetary policy stance from accommodative to neutral in early February. The reserve bank has reiterated and reinforced this stance ever since. The interest…
What are Infrastructure Bonds? The government of India awards infrastructure status to certain projects that are of national importance. Infrastructure projects are usually undertaken by PSU entities such as IDFC, PFC, etc. with L & T being the exception. Capital for these projects is raised through infra bonds. The minimum…
StanceThe RBI’s stance on monetary policy is crystal clear. In the last year, the challenges have been to manage excess liquidity, anaemic growth, low inflation, and the NPA crisis. The RBI acknowledges that any outcome is possible from this point and therefore chooses to maintain its neutral stance. Effectively, monetary policy decisions will be data-driven. Keeping this in mind, the reserve bank has left key rates unchanged.
* This post was updated on 30 November 2020 An Introduction As banking systems in multiple countries evolved, the need to have an international agreement that bound them arose. The idea was to addresses regulation, supervision, and risk management for banks across the globe. The Basel Committee on Bank…
What are non-convertible debentures and why are they issued? A company can raise capital either by offering an ownership stake (equity) or by borrowing money (debt). Debt is primarily issued in the form of loans, bonds, or debentures. Debentures are corporate debt instruments. Some may be converted into equity shares.…
The RBI first issued 8% bonds in 2003. As the name suggests, they pay 8% interest per annum and the interest income is taxable. Investors need to invest a minimum of Rs. 1,000 there is no ceiling or limit on the investment amount. Normally, the bonds have a maturity of six years.…