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MFs sell bonds of UTI, oil cos to book profits
Mumbai, Aug 07: UTI and oil bonds, which have been a rage in the bond market in the recent past, are being sold by mutual funds in large volumes during this week. On Wednesday, around Rs 40-50 crore worth of these bonds (better known in the debt market as surrogate sovereign bonds on account of having features of government securities, but no SLR status) were traded.
Mumbai, Aug 07: UTI and oil bonds, which have been a rage in the bond market in the recent past, are being sold by mutual funds in large volumes during this week. On Wednesday, around Rs 40-50 crore worth of these bonds (better known in the debt market as surrogate sovereign bonds on account of having features of government securities, but no SLR status) were traded.
A large portion of the trades were believed to be sales by mutual funds, who booked profits. These ‘surrogate sovereign bonds’ have emerged as special papers in the bond market commanding yields between the triple-A corporate papers and the government securities. The bonds traded in the market were the 6% special UTI bonds ’10 (traded at Rs 102.46, yield of 5.54%), 6.2% UTI bonds ’10 (Rs 103.56, 5.54%) and 6.4% UTI bonds ’10 (Rs 104.62, 5.55%).
The gross volumes in these bonds were Rs 16 crore. There were trades worth Rs 20 crore in the 11.24% UTI’s SUS bonds, which mature in ‘04. The bonds were traded at Rs 105.5, which corresponds to an yield of 5.19%. There were also deals worth Rs 5-10 crore in oil bonds, said dealers.
In the recent past, trading volumes in UTI and oil bonds had overtaken corporate bonds. Earlier this year, the government had issued three series of special bonds to a special undertaking of UTI to enable it to meet shortfall in assured return schemes. These were 6%, 6.2% and 6.4% UTI special bonds, maturing in ’10. It had issued oil bonds worth Rs 9,000 crore in March ’02, in lieu of the estimated outstanding claims of oil companies on the Oil Co-ordination Committee (OCC), under the now abolished administered pricing mechanism. These bonds will mature in ’09. The 11.24% UTI-SUS special securities were issued to UTI by the government in ’99 to bail out US-64.
The scheme involved shares of PSUs and banks in US-64’s portfolio, with a cumulative book value of Rs 3,300 crore being transferred to SUS-99. In turn, SUS-99 units were subscribed by the government. “The UTI and oil bonds offer spreads between 10 and 20 basis points, which is attractive,” said dealers. Bureau Report
In the recent past, trading volumes in UTI and oil bonds had overtaken corporate bonds. Earlier this year, the government had issued three series of special bonds to a special undertaking of UTI to enable it to meet shortfall in assured return schemes. These were 6%, 6.2% and 6.4% UTI special bonds, maturing in ’10. It had issued oil bonds worth Rs 9,000 crore in March ’02, in lieu of the estimated outstanding claims of oil companies on the Oil Co-ordination Committee (OCC), under the now abolished administered pricing mechanism. These bonds will mature in ’09. The 11.24% UTI-SUS special securities were issued to UTI by the government in ’99 to bail out US-64.
The scheme involved shares of PSUs and banks in US-64’s portfolio, with a cumulative book value of Rs 3,300 crore being transferred to SUS-99. In turn, SUS-99 units were subscribed by the government. “The UTI and oil bonds offer spreads between 10 and 20 basis points, which is attractive,” said dealers. Bureau Report