S&P's outlook revision may not impact bond mkt, say bankers
Published on Thu, Mar 18, 2010 at 23:02 | Source : CNBC-TV18
Updated at Fri, Mar 19, 2010 at 10:59
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S&P's outlook revision may not impact bond mkt, say bankers
Bankers say the corporate bond market has probably noticed the government's efforts much before the S&P revised its outlook, reports CNBC-TV18's Gopika Gopakumar. Bankers feel it is unlikely that the bond market will react to the S&P's revision on the outlook.
Standard & Poor's today affirmed its ratings on India and revised its outlook to stable from negative. But will this mean borrowings will become cheaper for Indian corporates?
Bankers say the corporate bond market has probably noticed the government's efforts much before the S&P revised its outlook, reports CNBC-TV18's Gopika Gopakumar. Spreads have become tighter in the last few weeks in the bond market. FIIs have been seen buying into the bond market since February and that is when the government had announced a roadmap for fiscal consolidation and reduced the fiscal deficit for the next year.
Bankers feel it is unlikely that the bond market will react to the S&P's revision on the outlook.
On the credit default swaps (CDS), the spreads have also not changed in today's trade post the S&P's announcement. ICICI Bank's spreads have fallen from 210 basis points (bps) in February end to 175-180 bps in mid-March. However, a tightening in spreads can be expected going forward in the CDS market for some Indian papers. CDS is an indicator of the risks associated with the Indian corporate bond market.
