The fall in yields of government bonds and corporate bonds has led to a significant increase of 10.6% in assets under management of debt mutual funds in November 2016 to Rs 11.86 trillion. Fall in yields is attributed to RBI positive stance on liquidity and demonetisation. SEBI data shows that in November 2016, mutual funds exposure to PSU bonds increased by 19.43% to all time highs of Rs 1205.62 billion over the last two months while gsec exposure was at Rs 1.62 triilion, higher by Rs14.84 billion.
FII debt utilisation status stood at 66.27% of total limits. Commercial Paper (CP) market trading volumes were 53.65% lower week on week and Certificate of Deposits (CD) volumes were lower by 9.14%
Corporate Bonds Traded Levels
Three-year AAA corporate bonds were trading at levels of 7.03% as of week ended 16th December. Spreads were 7 bps down week on week at 64 bps. Three-year AAA NBFC bonds were trading at levels of 7.73% with spreads 2 bps down at 134 bps levels. Three year AA+ NBFC bonds were trading at levels of 8.15% with spreads 2 bps down at 176 bps.
Five-year AAA corporate bonds were trading at levels of 7.28%. Spreads were 6 bps down at 62 bps. Five-year AAA NBFC bonds were trading at levels of 7.83% with spreads 1 bps down at 117 bps.
Ten-year AAA corporate bonds were trading at levels of 7.46% with spreads 6 bps up at 85 bps. Ten-year AAA NBFC bonds were trading at levels of 7.83% with spreads 3 bps up at 122 bps.
In the week ended 16th December, FIIs were net sellers of INR bonds for around Rs 15.90 billion for the week. Reported corporate bond traded volumes stood at Rs 152.4 billion with daily average volumes of Rs 38.1 billion. Volumes were 57.87% lower compared to the previous week.
CP traded volumes were at Rs 122.89 billion (53.65% lower than previous week) with daily average volumes of Rs 30.72 billion. CD volumes were at Rs 164.28 billion (9.14% lower than previous week) with daily average volumes of Rs 41.07 billion.
One month PSU bank CDs were trading at 6.40% levels. Three-month residual maturity CDs were most active with volumes of Rs 83.06 billion. Three months and twelve months PSU bank CDs were trading at 6.25% and 6.55% levels each at spreads of 6 bps and 31 bps respectively against T-bill yields. Three months maturity Manufacturing and NBFC sector CPs were trading at 6.35% and 6.65% levels respectively.
One-year maturity Manufacturing and NBFC sector CPs were trading at 7.25% and 7.45% levels respectively.
As on 16th December, debt utilisation status stood at 66.27% of total limits, 34 bps lower against previous week. FII investment position was at Rs 3126.62 billion in INR debt. FII investment position stands at Rs 1537.18 billion in gilt securities that also includes investment in Interest Rate Futures and at Rs 1589.44 billion in corporate bonds
