Government Securities

EPFO's return in 1977-78 was 8%. It has since been 8.25% or more; the peak was 12%, a rate that remained unchanged between 1989-90 and 1999-2000

Yield curve inversion suggests that the market is becoming more pessimistic about the economic prospects for the near future

The Reserve Bank of India on Friday came out with draft norms for lending and borrowing of government securities with wider participation in the securities lending market. Earlier this month, the RBI proposed introduction of securities lending and borrowing in government securities (G-secs) with an aim to facilitate wider participation in the securities lending market by providing investors an avenue to deploy idle securities and enhance portfolio returns. "Government Securities Lending (GSL) transactions shall be undertaken for a minimum period of one day and a maximum period of ninety days," said the draft Reserve Bank of India (Government Securities Lending) Directions, 2023. It has invited comments from banks, market participants and other interested parties by March 17, 2023. The draft said government securities issued by the central government excluding Treasury Bills would be eligible for lending/borrowing under a GSL transaction. Government securities issued by the central

Constitution of underlying indexes doesn't matter since all the three categories of bonds they invest in are safe

The borrowing cost of states continued to remain low for the second week with the latest auction on Tuesday seeing average yield staying almost flat at 7.68 per cent. Many states stayed away from the market following disbursal of the tax devolution amount by the Centre earlier this month. The weighted average yield/cut-off of State Government Securities (SGS) inched up by 1 basis point to 7.68 per cent at the auction on Tuesday compared to the past week despite a sharp increase in the weighted average tenor to 17 years from 12 years, Icra chief economist Aditi Nayar said in a note. Normally bond prices change according to the tenor of the issue, and the 10-year bonds are considered the benchmark when it comes to pricing and also from a demand perspective. At Tuesday's auction, the states issued bonds of varying tenor, peaking at 25 years (Tamil Nadu issued 25-year paper at 7.63 per cent) pushing up the median average tenor sharply to 17 years from 12 years last week. However, the

Yield-to-maturity between 7.36% and 7.5% for these schemes with fixed tenure makes them attractive bet

Banks traded Rs 275 crore ($33.3 million) of bonds on the first day using the new form of currency, data showed

At the latest auction of debt, 10 states raised Rs 19,500 crore on Monday, drawing down the full amount indicated for this week.

Foreign investors held a smaller share of government securities as of September than they did in March

The bank had notified an amount of Rs 7,000 crore to be raised through a single tranche of AT-1 bonds in order to augment capital.

Even though the government is yet to make up its mind on inclusion of G-Secs (Government Securities) in global bond indices, Wall Street brokerage Morgan Stanley expects indices major JP Morgan to make an announcement in this regard as early as next week. On Monday finance minister Nirmala Sitharaman told an industry gathering that the 2020 budget proposal on allowing bond inclusion in international indices could not move forward as the fund flows did not meet the desired levels, due to many reasons including the Covid pandemic. Without offering any details like a timeline or the tax and stamp duty breaks that investors were demanding, Sitharaman said: "I don't know whether we're holding it back or not. I think global situation changed a lot since I made that statement in the 2020 budget. "Global fund flows have not been as big as we wanted it to be primarily due to other reasons. So it'll come to its natural, logical conclusion soon." According to the RBI data, G-Secs outstanding

The higher yields have provided a good entry point for debt investors after years of low yields

The Reserve Bank of India defines securitisation as transactions where credit risks in assets are redistributed by repackaging them into tradable securities

State-owned lenders, which hold large quantities if G-Secs, to face brunt of yield spike

Given the risk of high inflation, bond yields can harden further. However, current rates are attractive and provide good scope to start nibbling, say experts

The yield jumped 4 basis points (bps) on Monday after Saudi Arabia - the world's biggest oil exporter - raised prices for Asian buyers

The RBI has also proposed to allow interoperability in cardless cash withdrawal transactions at all banks and ATMs using the UPI facility

Market participants say this means comfortable cash position govt's which is also reflected in cancellation of bond auction twice in this month

The Budget had indicated that green bonds are part of the overall borrowing for the next financial year

Avoid longer-duration bonds; if you buy them, hold till maturity