Key Treasuries

Twenty-year government treasuries will hit the market on the 20th of this month, but debt market experts say the extended yield curve has failed to stimulate the corporate bond market.
The yield curve that barely extended to two years has been extended to fifteen years by the issue of long-term treasuries.rn

rnPublic debt department officials say the first 20-year bond auction will offer a billion rupees worth of bonds carrying an annual coupon of 7 percent.rn

rnBonds with floating rates of interest could also arrive soon.rn

rnTrading on bonds above ten years is limited but dealers say bonds with shorter maturities are actively traded and the yield curve up to ten years is without too many distortions.rn

rnHowever, corporate debt issues even in the 5 to 6 year range have not materialized, despite businesses bitterly complaining about penal interest rates charged by banks.rn

rnWhile it could take a few years before the longer end of the yield curve takes proper shape, analysts say that the curve up to six years, could confidently be used to benchmark corporate bond issues.rn

rnThere will always be some volatility according to bond traders due to falling interests rates, which will be reflected in the inverted yield curve.rn