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Debt mart hits turnover peak

B G Shirsat

The debt market was flooded with floats during 2001-02, with 560 issues hitting the listings.

Data provided by the wholesale debt market segment of the National Stock Exchange show that issuers preferred to mobilise money through marketable instruments with short-term maturities.

This also includes 86 tranches of treasury bills floated by the Reserve Bank of India as part of the government's borrowing programme.

Of the 560 debt issues launched between April 2001 and March 2002, about 44 per cent (246 debt issues) raised money with maturity period of just three months. As many as 27 issues mobilised money for six months, while 78 issues were with a maturity of one year.

Another 77 debt issues were made for a period between 1 year 5 years, and 115 issues raised money for maturities between 5 and 10 years.

It is, perhaps, a mark of the emerging depth of the Indian debt markets that 13 instruments were floated last year to raise money for periods between 10 years and 20 years, and just one issue raised money for a 25 year maturity.

Interestingly, 57.2 per cent of the issues were instruments with a zero interest coupon.

The 320 debt instruments in this category, mostly commercial papers and treasury bills for 90 days maturity, were issued with a zero coupon rate.

Of the 320 issues, 49 were for long-term and 26 were for six months maturity. Long-term papers, with maturities over 10 years, were floated at interest rates varying between 8 per cent and 11 per cent. But there is a greater variation at the short end of the market.

Between 5 and 10 years, the interest rates ranged between 8 per cent and 10.50 per cent.

Only six debt instruments were issued at coupon of over 12 per cent and five were bearing coupons between 11 per cent and 12 per cent.

The 65 issues were made at a coupon of 9-10 per cent, while 79 were bearing a coupon of 8-9 per cent. As many as 80 issues were at coupon of 10-11 per cent.

State governments issued 109 debt instruments, most of which were 10-year papers maturing in 2011. Among financial institution, ICICI floated 27 debt instruments, while the Industrial Development Bank of India raised money through 18 debt instruments.

The other major corporates which mobilised resources during 2001-02 were, Larsen & Toubro (26 issues), Indian Oil Corporation (23), G E Capital and BPCL (11 each), Dabur (18), ACC (12), and Tatas (15).

The turnover in the WDM segment at NSE soared to a record high of Rs 9,503.17 billion during the fiscal. This was almost 95 per cent of the total turnover of Rs 10,104.57 billion recorded in the previous 82 months between June 1994 and March 2001.

Indian and foreign banks were the largest traders in the WDM segment, accounting for 49.83 per cent of the total turnover.

Brokers were the second largest participants, sharing 23.48 per cent of the total trade.

Trades of primary dealers account for 22.53 per cent, while the share of financial institutions was 2.37 per cent and that of mutual funds 1.61 per cent.

Among banks, Indian banks shared 36.63 per cent of the total volume at Rs 3,481.01 billion, while foreign banks shared 13.20 per cent at Rs 1,254.42 billion.

Brokers shared 23.48 per cent of the aggregated volume of Rs 2,221.34 billion, while primary dealers aggregated a volume of Rs 2,141.06 billion.

Financial institutions aggregated a volume of Rs 225.23 billion, while mutual funds were at Rs 153 billion.

In the WDM segment, 95.24 per cent trading centered around government securities, treasury bills at 2.71 per cent, public sector bonds 0.65 per cent, corporate debt instruments 0.63 per cent, institutional bonds 0.49 per cent and the rest 4.76 per cent from bank bonds.

Among government securities, CG2008, bearing a tag of 11.40 per cent aggregate 9.43 per cent (Rs 921.22 billion) of the total turnover of WDM. CG2012 (11.03%) aggregated a volume of Rs 894.74 billion which is 9.16 per cent of the total turnover of WDM.

GS2011 (11.50 per cent) aggregated the turnover of Rs 839.43 billion accounting for 8.59 per cent of the turnover.

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