[Investors Please Listen] Bond Supplies - Government doles out 2/3rds of budgeted FY10 borrowing in H1FY10

Government doles out 2/3rds of budgeted FY10 borrowing in H1FY10

As we enter into FY10 when the government and RBI are expected to steer the economy from the ongoing slump through various monetary and fiscal tools and the tax kitty is likely to shrink due to the rates reduction and the overall economic contraction, capital receipts will play a significant role in financing the INR 9.5 tn expenditure bill.

 

The RBI, on March 26, announced the H1FY10 borrowing program at INR 2.41 tn, with an estimated weekly borrowing (bonds, bills and state development loan, SDL) of INR 230 bn (table 1). Given below are some details of the borrowing program:

n         Compared with INR 960 bn in H1FY09, INR 2410 bn will be auctioned in H1FY10.

n         With debt servicing of INR 1.01 tn in H1FY10, net borrowing is INR 1.41 tn.

n         Of INR 1.01 tn, INR 330 bn is in bond redemptions and remaining in interest payments.

n         OMO buyback would continue over the next 6-months; INR 800 bn worth bonds are expected to be bought back, equally distributed over the two quarters.

n         MSS bonds and bills worth INR 420 bn would be unwound over H1 FY10, INR 375 bn in Q1 and rest over next quarter.

n         In Q1FY10, the monthly issuance will be INR 480 bn against INR 320 bn in Q2.

 

The benchmark yield shot 20bps to 7.18% as a knee jerk to borrowing programme release; however, it recovered and closed at 7%. As the details of the financing the auction through OMO and MSS unwinding was released after market hours we can anticipate positive opening on March 30.

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TV18's Fixed Deposit scheme

Interest will be paid quarterly on 31^st March, 30^th June, 30^th September, and 31^st December

EXPORT-IMPORT BANK OF INDIA : TERM DEPOSIT SCHEME

Interest Rate effective from March 16, 2009

Amount (in Rs.)	Perdiod (months)	Rate of Interest
Upto and inclusive of Rs. 1 Crore	12-60	9.25 % p. a.
Above Rs. 1 Crore	12-60	8.00% p. a.

^* The rate is applicable to Resident Individuals, NRIs, HUFs and Superannuation Funds only. Corporates / Institutional Investors should obtain prevailing rate from Exim Bank on a day to day basis. The benefit of increase in interest rate is now available to the existing term deposits for the residual period till maturity at the interest rate currently applicable to the residual tenor.

NOTE :

1. Interest compounded on quarterly basis.
2. Minimum Deposit of Rs.10,000/- and in multiples of Rs.1,000/- thereafter.
3. Interest is subject to deduction of tax at source, wherever applicable.
4. The above rates are applicable to Resident Individuals, NRIs, HUFs and Superannuation Fund, Army Group Insurance and Army Defence Regiment Funds, IIMs, IITs.
5. Senior citizens will be eligible for additional interest at 0.25% p.a. on deposits placed for 12-35 months and 0.50% p.a. on deposits placed for 36 months and above.
6. Cheques/Demand Drafts to be drawn favouring ‘Exim Bank Term Deposit Account’.

 

Term Deposit scheme FAQ

Flexibility

1. The benefit of future increases in interest rates will be available to the existing term deposits for the residual period till maturity at the interest rate applicable to the residual maturity period, without any action on the part of the depositor.
2. In case the existing rate on a deposit (contracted based on original maturity at the time of placing deposit) is higher than the revised rate applicable to the residual tenor, then the original higher rate would continue to apply.
3. The above flexibility is available only on deposits placed by individuals/NRIs/trusts/HUFs and superannuation funds.
4. Interest rate on 3-year and 5-year floating rate term deposits could be benchmarked to 3-year and 5-year G-sec rates respectively.
5. For further details or clarification please contact us at: (Phone No. 0-9818269396) or Email @ investorspleaselisten@in.com

SEBI Press Release - 4th December 2008 - Close Ended Schemes Notification -VERY IMPORTANT

SEBI at it Board Meeting held on 4th December 2008 has issued fresh guidelines as regards all Future Close Ended Schemes (Therefore all FMP's except QIF Plans) yet to be launched. Please read the below mentioned paragraph relating to all future FMP's as stated in their Press Release.

It was decided that no early exit will be allowed in any scheme of Mutual Fund in the nature of a close ended scheme. The Schemes which have been approved earlier but not yet launched will also have to be amended accordingly. It will be obligatory for the Asset Management Company to list the close ended schemes. The Board also decided that for such close ended schemes the underlying assets will not have a maturity beyond the date on which the scheme expires. - Please find attached the Press Release.

SEBI Press Release - 4th December 2008 - Close Ended Schemes Notification -VERY IMPORTANT

SEBI at it Board Meeting held on 4th December 2008 has issued fresh guidelines as regards all Future Close Ended Schemes (Therefore all FMP's except QIF Plans) yet to be launched. Please read the below mentioned paragraph relating to all future FMP's as stated in their Press Release.

It was decided that no early exit will be allowed in any scheme of Mutual Fund in the nature of a close ended scheme. The Schemes which have been approved earlier but not yet launched will also have to be amended accordingly. It will be obligatory for the Asset Management Company to list the close ended schemes. The Board also decided that for such close ended schemes the underlying assets will not have a maturity beyond the date on which the scheme expires. - Please find attached the Press Release.

SEBI Fixes FMPs

The Securities and Exchange Board of India in its board meeting today decided to fix the structural flaw in fixed maturity plans.

It was decided that no early exit will be allowed in any scheme of mutual fund in the nature of a closed-end scheme. The schemes which have been approved earlier but not yet launched will also have to be amended accordingly. It will be obligatory for the asset management company to list the close ended schemes. The board also decided that for such close ended schemes the underlying assets will not have a maturity beyond the date on which the scheme expires.

This regulatory obligation will save fund managers from distress sale if investors decide to redeem their money before maturity. This is with an intent to guard the interest of the remaining investors. The order will also drive fund managers to be disciplined in building their portfolio as fund have been debarred from buying bonds of longer maturity than their own.

For investors, the order will mean a compromise on the interim liquidity and NAV realisation as closed-end listed funds generally trade at steep discount to their NAV. In any case, FMPs’ ownership profile makes them unsuitable for listing. There are a very large number of FMPs which serve a fairly limited pool of investors. Under the circumstances, the existence of a liquid market for any individual FMP is unlikely.

For all practical purposes, this order strips FMPs of their feature of premature encashment. Investors will now have to approach FMPs as investments that have a genuine lock-in.

However, this fix applies only to all new funds to be launched. This will not save existing fixed maturity plans from the problem caused by premature redemptions.

SEBI Fixes FMPs

The Securities and Exchange Board of India in its board meeting today decided to fix the structural flaw in fixed maturity plans.

It was decided that no early exit will be allowed in any scheme of mutual fund in the nature of a closed-end scheme. The schemes which have been approved earlier but not yet launched will also have to be amended accordingly. It will be obligatory for the asset management company to list the close ended schemes. The board also decided that for such close ended schemes the underlying assets will not have a maturity beyond the date on which the scheme expires.

This regulatory obligation will save fund managers from distress sale if investors decide to redeem their money before maturity. This is with an intent to guard the interest of the remaining investors. The order will also drive fund managers to be disciplined in building their portfolio as fund have been debarred from buying bonds of longer maturity than their own.

For investors, the order will mean a compromise on the interim liquidity and NAV realisation as closed-end listed funds generally trade at steep discount to their NAV. In any case, FMPs’ ownership profile makes them unsuitable for listing. There are a very large number of FMPs which serve a fairly limited pool of investors. Under the circumstances, the existence of a liquid market for any individual FMP is unlikely.

For all practical purposes, this order strips FMPs of their feature of premature encashment. Investors will now have to approach FMPs as investments that have a genuine lock-in.

However, this fix applies only to all new funds to be launched. This will not save existing fixed maturity plans from the problem caused by premature redemptions.