Indian Companies Switch To Shorter Tenors As Yield Curve Steepens

Indian companies favored shorter maturity bonds in the January to March quarter, after the yield curve between the three-year and 10-year bonds steepened to the most since August 2010.

The spread between three-year and 10-year noted has widened to 63 basis points, from just 11 basis points before the monetary panel, led by the Reserve Bank of India Governor Urjit Patel, changed its stance from neutral to accommodative.

Trust Capital, a intermediation services provider in the Indian fixed income market, does not see the curve flattening anytime soon since the central bank will be on a prolonged pause.

Indian companies borrowed Rs 21,700 crore from the bond market against Rs 16,300 crore last week. National Bank for Agriculture and Rural Development was the largest borrower, followed by National Highways Authority of India and Indian Railway Finance Corporation Ltd.