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Bonds are usually issued by the companies in need of finances. Those buying these bonds become the creditors of the company which is then bound to repay the original sum of money lent along with due interests. In Bond Market parlance, the Bond Market may also be called as the Debt Market, or Credit Market. Let us be clear of the few terms used in the bond market.
Bond Yield
Bond Yield is meant as the rate of interest that is paid by the company issuing bonds to the owner of any particular bond.
Bond Rate
Bond rate is the rate paid by the company to the investor. The rate on the bond is always inversely proportional to the prices of bonds.
Bond Investing
Bond investing is an option of investment over the world. Investing on bonds may be short term in nature or long term in nature. Find more information on bond investing.
Fiscal deficit is a measure of borrowings by the government in a financial year. In budgetary arithmetic, fiscal deficit is the total expenditure minus the sum of revenue receipts, recoveries of loans and other receipts such as proceeds from disinvestment.
The government raises resources to fund its expenditure through tax collections and borrowings from the Reserve Bank of India (RBI), from the public by floating bonds, financial institutions, banks and foreign institutions.
However, the Government and the different Federal Agencies are the organizations that are least likely to either turn hostile and not repay the sum of money lent by the bond holders or become bankrupt amounting to total losses incurred by the buyers of Bonds. This is the main reason behind the popularity of the Government and Federal Agencies in the Bond Market. Fiscal deficit has gone up from Rs.1,33,287 crore (2.5 per cent of
Dealers said, “About Rs 45,000 crore will be borrowed from the market by the government before March. The market has almost exhausted its strength and the trend is bearish. There is also ambiguity over the extra Rs 46,000 crore, which the government was planning to raise without visiting the market.” The main problem when the government goes out to burrow from public by issuing bonds is in this present scenario, confidence is very less among public and other institutions for the corporate esp private sector after the Satyam fiasco, so people will prefer to buy government bonds and invest their savings rather than go for corporate bonds from private entities. The time is already hard for corporates to get loan from the banks partially due to high interest rates and other reason is that banks have restricted their lending to cut their risk exposure in these turbulent times. The corporates require loans periodically to meet their business requirements. To meet their loan requirements they issue bonds and the public and institutions buy these bonds. But public are doubtful about the payment for their bonds in this recession market and due to availability of the money or say liquidity many projects are either temporarily stopped or dropped all together. Many expansion plans are being stalled due to unavailability of liquidity. The government, which unveiled an additional Rs 45,000 crore of borrowing, won’t raise the funds from the market by selling bonds, economic affairs Secretary Ashok Chawla said. The government is not considering the options of private placement with the Reserve Bank of
While intervening in the forex market, the RBI had been releasing rupees for buying dollars. The rupees so released added to liquidity in the system raising inflationary expectations. To mop up this excess liquidity, the central bank used its huge stock of government securities. But over a period this stock of securities held with RBI has come down sharply. It is in such a context that a new market stabilisation scheme (
The salient features of the
The Government will issue treasury bills and/ or dated securities under the
Specifically, these will be issued and serviced like any other marketable government securities. The treasury bills and dated securities will be issued by way of auctions to be conducted by the RBI. The Government, in consultation with the RBI, will fix an annual aggregate ceiling for these instruments. For 2004-05, the ceiling will be Rs. 60,000 crores. The amounts raised under the
The amounts credited into the
The payments for interest and discount will not be made from the
The treasury bills and dated securities issued for the purpose of the
After the interim budget for 2009-10 by Finance Minister Mr. Pranab Mukherjee, India’s fiscal position is a concern for the country’s rating, Fitch Ratings said although the deterioration revealed in the government’s interim budget on its own would not lead to a downgrade Fitch gives
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| Last Updated on Monday, 12 October 2009 11:24 |
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great to see incubation360 floating... really happy for you ppl... the look is also good this time... i like the colours...
i tired to log in but i did not get through, may be because the site is on trial... or do we have to sign up again..?