Description
ppt presenation on debt market
DEBT MARKET INSTRUMENTS IN INDIA
Presented by: Krishna 02 Anupam 07 Joy 11
Definition
Debt instruments are contracts in which one party lends money to another on predetermined terms with regard to rate of interest to be paid by the borrower to the lender, the periodicity of such interest payment, and the repayment of the principal amount borrowed.
What they call
? Indian securities markets: bond (issued by Central/ State governments or PSUs) ? Private corporate sector: debentures
Regulatory bodies
? RBI ? SEBI ? FIMMDA
Market Segments and Products in Debt market
Financial Engineering
It refers to the development and implementation of innovative financial instruments and process and the formulation of creative solutions to problems in financing.
Factors in Financial Engineering
1. 2. 3. 4. 5. 6. 7. 8. Tax advantage Reduces transaction cost Risk reallocation Increase liquidity Level and volatility of interest rates Level and volatility of prices Accounting benefits Technological development and other factors.
Different types of bonds
? ? ? ? ? Premium Bonds Convertible Bonds Zero Interest Bonds Mortgage Bonds Investment Bonds
Different types of bonds (contd..)
? ? ? ?
High yield bonds Fixed Income Bonds Deep Discount Bonds Zero Coupon Convertible Bonds
Different types of bonds (contd..)
? ? ? ?
Coupon Striping (Strips) Debt for equity swap Mezzanine debt Floating rate bonds
Other Hybrid debt instruments
? Multi option secured redeemable convertible debentures ? Callable bonds ? Option tender bonds ? Guaranteed debentures
Other Hybrid debt instruments (contd..)
? Indexed Bonds ? Inflation adjusted bonds ? Credit wrapping
Money market instruments
Money market instruments
Treasury Bills
Call Money Markey
Commercial Papers
Certificate of deposit
Repos
Treasury Bills (T-Bills)
There are three types of T-bills 1. 91-day 2. 182-day 3. 364-day
CALL MONEY MARKETS
? Refers to the market for short term funds ? Overnight basis: Call money market ? For the period of 2 days to 14 days: Notice money market
Commercial Paper (CPs)
? Short term, unsecured, negotiable promissory notes with fixed maturity ? Issued by rated corporate ? Issued at a discount on face value. ? In denominations of Rs. 5lakh or multiples ? maturities between a minimum of 7 days and a maximum up to one year
Certificate of Deposit (CDs)
? Short term deposit instruments ? Issued by banks and financial institutions to raise large sum of money ? Issued at a discount to the face value ? Denominations of Rs. 1lakh or multiples ? Maturities between a minimum of 7 days and a maximum up to one year ? Rates are usually higher than the term deposit rates, due to the low transactions costs
Repos
? Collateralized borrowing and lending ? Sold temporarily promise to buy back at a fixed future Date & fixed price ? In reverse repos securities are purchased in a temporary purchase with a promise to sell it back ? When one is doing a repo, it is reverse repo for the other party.
Secondary market for debt instruments
Secondary market
Wholesale Debt Market
Retail Debt Market
Wholesale Debt Market
? WDM trading market is known as NEAT ? Trading wide range of securities like all mentioned earlier
WDM Participant wise Turnover for July 2010
Participants Indian Banks
Foreign Banks Trading Members (Corporate) Primary Dealers Financial Institution MFs Total
Shares (in %)
17.74 23.7 50.61 5.03 1.11 1.81 100
Market Capitalisation as on July30, 2010
Security Type Market Capitalisation (in Rs. Mn) % of total
Govt Securities PSU Bonds State Loans Treasury Bills Local Bodies FIs Bank Bonds Corporate Bonds Total
20044516.11 1829048.63 5598098.05 1148502.74 26271.92 876328.33 1736173.65 1508400.42 32767339.85
61.17 5.58 17.08 3.51 0.08 2.67 5.30 4.61 100.00
Retail Debt Market
? Introduced to encourage all classes of investors ? Participants: Retail investors ? Trading in existing capital market segment ? RETDEBT Market facility is available on the NEAT system like WDM
Sources
? ? ? ? ? ? www.nseindia.com www.bse.com www.investopedia.com www.wikipedia.com http://sawaal.ibibo.com/ http://www.nseindia.com/content/ncfm/FIMMDA.pdf
Sources (contd..)
? Debt Markets by Sandeep Gupta: Sachin Bhadarkar ? http://www.nseindia.com/content/debt/debtup.pdf
Thank You
doc_508605769.ppt
ppt presenation on debt market
DEBT MARKET INSTRUMENTS IN INDIA
Presented by: Krishna 02 Anupam 07 Joy 11
Definition
Debt instruments are contracts in which one party lends money to another on predetermined terms with regard to rate of interest to be paid by the borrower to the lender, the periodicity of such interest payment, and the repayment of the principal amount borrowed.
What they call
? Indian securities markets: bond (issued by Central/ State governments or PSUs) ? Private corporate sector: debentures
Regulatory bodies
? RBI ? SEBI ? FIMMDA
Market Segments and Products in Debt market
Financial Engineering
It refers to the development and implementation of innovative financial instruments and process and the formulation of creative solutions to problems in financing.
Factors in Financial Engineering
1. 2. 3. 4. 5. 6. 7. 8. Tax advantage Reduces transaction cost Risk reallocation Increase liquidity Level and volatility of interest rates Level and volatility of prices Accounting benefits Technological development and other factors.
Different types of bonds
? ? ? ? ? Premium Bonds Convertible Bonds Zero Interest Bonds Mortgage Bonds Investment Bonds
Different types of bonds (contd..)
? ? ? ?
High yield bonds Fixed Income Bonds Deep Discount Bonds Zero Coupon Convertible Bonds
Different types of bonds (contd..)
? ? ? ?
Coupon Striping (Strips) Debt for equity swap Mezzanine debt Floating rate bonds
Other Hybrid debt instruments
? Multi option secured redeemable convertible debentures ? Callable bonds ? Option tender bonds ? Guaranteed debentures
Other Hybrid debt instruments (contd..)
? Indexed Bonds ? Inflation adjusted bonds ? Credit wrapping
Money market instruments
Money market instruments
Treasury Bills
Call Money Markey
Commercial Papers
Certificate of deposit
Repos
Treasury Bills (T-Bills)
There are three types of T-bills 1. 91-day 2. 182-day 3. 364-day
CALL MONEY MARKETS
? Refers to the market for short term funds ? Overnight basis: Call money market ? For the period of 2 days to 14 days: Notice money market
Commercial Paper (CPs)
? Short term, unsecured, negotiable promissory notes with fixed maturity ? Issued by rated corporate ? Issued at a discount on face value. ? In denominations of Rs. 5lakh or multiples ? maturities between a minimum of 7 days and a maximum up to one year
Certificate of Deposit (CDs)
? Short term deposit instruments ? Issued by banks and financial institutions to raise large sum of money ? Issued at a discount to the face value ? Denominations of Rs. 1lakh or multiples ? Maturities between a minimum of 7 days and a maximum up to one year ? Rates are usually higher than the term deposit rates, due to the low transactions costs
Repos
? Collateralized borrowing and lending ? Sold temporarily promise to buy back at a fixed future Date & fixed price ? In reverse repos securities are purchased in a temporary purchase with a promise to sell it back ? When one is doing a repo, it is reverse repo for the other party.
Secondary market for debt instruments
Secondary market
Wholesale Debt Market
Retail Debt Market
Wholesale Debt Market
? WDM trading market is known as NEAT ? Trading wide range of securities like all mentioned earlier
WDM Participant wise Turnover for July 2010
Participants Indian Banks
Foreign Banks Trading Members (Corporate) Primary Dealers Financial Institution MFs Total
Shares (in %)
17.74 23.7 50.61 5.03 1.11 1.81 100
Market Capitalisation as on July30, 2010
Security Type Market Capitalisation (in Rs. Mn) % of total
Govt Securities PSU Bonds State Loans Treasury Bills Local Bodies FIs Bank Bonds Corporate Bonds Total
20044516.11 1829048.63 5598098.05 1148502.74 26271.92 876328.33 1736173.65 1508400.42 32767339.85
61.17 5.58 17.08 3.51 0.08 2.67 5.30 4.61 100.00
Retail Debt Market
? Introduced to encourage all classes of investors ? Participants: Retail investors ? Trading in existing capital market segment ? RETDEBT Market facility is available on the NEAT system like WDM
Sources
? ? ? ? ? ? www.nseindia.com www.bse.com www.investopedia.com www.wikipedia.com http://sawaal.ibibo.com/ http://www.nseindia.com/content/ncfm/FIMMDA.pdf
Sources (contd..)
? Debt Markets by Sandeep Gupta: Sachin Bhadarkar ? http://www.nseindia.com/content/debt/debtup.pdf
Thank You
doc_508605769.ppt