31 Aug 2020
AAA PSU Credit Spreads Fall even as G-sec Yields Rise
Credit Spreads Snapshot For The Week • 3 and 12 Months CD yields rose by 5-15 bps. • 3 and 12 Months NBFC CP yields fell by 8-15 bps. • Morgan Stanley India Primary Dealer Pvt Ltd issued Rs 6.3 billion, 4-year bond at 5.33%, 80 bps spreads • Bajaj Finance Ltd , AAA, issued Rs 100 million, 10-year bond at 7.25%, 219 spreads • FII debt utilization status stood at 31.78% of total limits. FIIs investment in bonds came down by Rs 45.51 billion
Paresh Nemade
Credit Spreads Snapshot For The Week
- 3 and 12 Months CD yields rose by 5-15 bps.
- 3 and 12 Months NBFC CP yields fell by 8-15 bps.
- Morgan Stanley India Primary Dealer Pvt Ltd issued Rs 6.3 billion, 4-year bond at 5.33%, 80 bps spreads
- Bajaj Finance Ltd , AAA, issued Rs 100 million, 10-year bond at 7.25%, 219 spreads
- FII debt utilization status stood at 31.78% of total limits. FIIs investment in bonds came down by Rs 45.51 billion
Government bond yields continued to rise last week on persistent sell-off. AAA PSU Credit spreads fell as corporate bond yields were steady. In the last one week, AAA PSU spreads fell by 1-17 bps across the curve. HFCs spreads fell by 2-7 bps while AAA NBFC spreads for 2,3, and 5 years fell by 7-13 bps.
As per SEBI data, From March 2020 to July 2020 period Mutual Fund exposure to NBFC CPs rose 17.1% to Rs 512.68 billion .During the week, IDBI Bank Ltd 10 year bond was trading at 9.34%, at spreads of 290 bps. Muthoot Finance 1 year bond was trading at 6.78%, at spreads of 299 bps,THDC LTd Ltd 9 year bond was trading at 7.32%, at spreads of 108 bps
Spread Movement-28th August 2020
| PSU - Gsec (Spread) | Current Spread | 1-Day Change | 1-Week Change | 1-Month Change |
|---|---|---|---|---|
| 1 Year | 42 | 3 | 2 | -14 |
| 2 Year | 40 | -1 | 1 | -26 |
| 3 Year | 62 | 6 | -13 | -12 |
| 5 Year | 29 | -4 | 4 | 4 |
| 10 Year | 47 | 2 | -11 | -14 |
| NBFC - GSec(Spread) | Current Spread | 1-Day Change | 1-Week Change | 1-Month Change |
| 1 Year | 129 | -7 | -11 | -24 |
| 2 Year | 85 | -11 | -28 | -58 |
| 3 Year | 126 | -4 | -16 | -10 |
| 5 Year | 114 | -11 | 15 | 2 |
| 10 Year | 146 | -8 | 6 | 13 |
| NBFC - PSU(Spread) | Current Spread | 1-Day Change | 1-Week Change | 1-Month Change |
| 1 Year | 87 | -10 | -13 | -10 |
| 2 Year | 45 | -10 | -29 | -32 |
| 3 Year | 64 | -10 | -3 | 2 |
| 5 Year | 85 | -7 | 11 | 6 |
| 10 Year | 99 | -10 | 17 | 27 |
| HFC -Gsec(Spread) | Current Spread | 1-Day Change | 1-Week Change | 1-Month Change |
| 1 Year | 83 | 9 | 15 | -18 |
| 2 Year | 76 | 2 | -13 | -30 |
| 3 Year | 96 | 3 | -14 | -21 |
| 5 Year | 65 | -8 | 3 | -12 |
| 10 Year | 82 | -3 | -8 | -16 |
| HFC-PSU(Spread) | Current Spread | 1-Day Change | 1-Week Change | 1-Month Change |
| 1 Year | 41 | 6 | 13 | -4 |
| 2 Year | 36 | 3 | -14 | -4 |
| 3 Year | 34 | -3 | -1 | -9 |
| 5 Year | 36 | -4 | -1 | -8 |
| 10 Year | 35 | -5 | 3 | -2 |
Weekly Money Market Movement
| Dates | - | 04-09-20 | 28-08-20 | Change (%) |
| Weekly FII Investment | (Rs billion) | 9.28 | -45.51 | 120.39% |
| - | - | - | - | Change in bps |
| AAA PSU yields (%) | 3 Years | 5.01% | 5.28% | -27 |
| 5 Years | 5.60% | 5.86% | -26 | |
| 10 Years | 6.51% | 6.83% | -32 | |
| AAA HFC yields (%) | 3 Years | 5.35% | 5.63% | -28 |
| 5 Years | 5.96% | 6.23% | -27 | |
| 10 Years | 6.86% | 7.15% | -29 | |
| CD yields (%) | 3 months | 3.24% | 3.25% | -1 |
| - | 12 months | 3.95% | 4.00% | -5 |
| CP yields (%) | 12 Months | - | - | - |
| - | Manufacturing | 4.20% | -5 | |
| - | NBFC | 4.40% | 4.45% | -5 |
| - | 3 Months | - | - | - |
| - | Manufacturing | 3.33% | 3.35% | -2 |
| - | NBFC | 3.42% | 3.45% | -3 |
| FPI limit utilization | (In %) | 31.89% | 31.78% | 11 |
Weekly Issuers
| Name of Issuer | Face Value (Rs mn) | Issue Size (Rs mn) | Maturity (Years) | Coupon Rate (%) | Credit Rating | Business Sector | Type of Issuer-Nature | Spreads (bps) |
|---|---|---|---|---|---|---|---|---|
| MANBA FINANCE LIMITED | 1 | 100 | 1 | 13.25% | BWR-BBB+ | Finance | NBFC | 1037 |
| KOGTA FINANCIAL (INDIA) LIMITED | 1 | 300 | 1 | 9.50% | CARE-A- | Finance | NBFC | 579 |
| EDELWEISS HOUSING FINANCE LIMITED | 1 | 1750 | 1 | 9.25% | ICRA-A+/Negative | Finance | Other | 586 |
| VERITAS FINANCE PRIVATE LIMITED | 1 | 500 | 1 | 9.50% | CARE-A- | Finance | NBFC | 579 |
| PIRAMAL CAPITAL & HOUSING FINANCE LIMITED | 1 | 1500 | 1 | 8.10% | CARE-AA | Finance | Other | 455 |
| SATIN CREDITCARE NETWORK LIMITED | 1 | 500 | 1 | 10.20% | CARE-A- | Finance | NBFC | 675 |
| EDELWEISS FINANCIAL SERVICES LIMITED | 1 | 10000 | 3 | 8% | Finance | Other | 385 | |
| AADHAR HOUSING FINANCE LIMITED | 1 | 1650 | 3 | 8.20% | CARE-AA | Finance | Other | 406 |
| KIFS HOUSING FINANCE LIMITED | 1 | 250 | 3 | 9.81% | ACUITE-BBB+/Positive | Others | Other | 578 |
| INDIA GRID TRUST | 1 | 4000 | 3 | 8.50% | CRISIL-AAA/Stable | Others | Other | 438 |
| ANNAPURNA FINANCE PRIVATE LIMITED | 1 | 1000 | 5 | 11.30% | ICRA-A-/Stable | Finance | NBFC | 631 |
| HPCL-MITTAL ENERGY LIMITED | 1 | 10000 | 5 | 7.15% | IND-AA+/Stable | Utilities | Other | 204 |
Benchmark Bonds
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