Debt market commentary – rates softening

July ’16 Debt Market wrap up.

The yield on the 10-year benchmark (7.59% GoI 2026) ended the month of July at 7.16%. The yield on 10-year AAA Corporate Bond ended July at 7.82%. The theme over past few months has clearly been decreasing yields. The overnight rate ended at 6.59% at end July 2016 as against 6.96% 1 Jan 2016, while the INR closed at 66.69 July 2016 versus the USD as against 66.23 1 Jan 2016, a depreciation of 0.69%. While most global sovereign debt is trading at negative yields, and quantitative easing in Japan and Europe, high positive yields on Indian sovereign bonds makes them attractive to foreign investors. YTD, there has been significant improvement in India’s twin deficits (current account deficit and fiscal deficit), the currency outlook is relatively stable, and core inflation has been falling steadily since March 2014. Inflation might moderate even more thanks to a good monsoon. All these facts point to an expectation to more rate cuts by the RBI leading to higher expected yields. FII debt inflows are likely to be strong going forward, for both corporate and government bonds.

The rates which Credy charges are a function of the interest rates prevailing in the market. While these rates are higher than corporate and government bond rates, a moderating interest rate scenario in India would affect the rates you as an investor would get from borrowers. This is an attractive opportunity for you to register as a lender on Credy and invest.

Register as a lender, and start earning market beating returns!