Investors not keen to sell US-64 bonds

MUMBAI: Initial trading patterns of the US-64 bonds has revealed that investors holding these bonds are not quite keen to sell them, but to hold on till maturity, considering the products’ attractive features.
As a result, there are few sellers in the market, though there have been substantial purchase bids. These bid have come mainly from the private sector mutual funds and banks.This demand-supply gap has, in turn, pushed up the prices of these bonds, which as on Monday’s close touched Rs 107.09 with the delivery percentage at 98 per cent.
Market analysts point out that this development has once again questioned earlier doubts on the much-touted tradeability of these bonds. Trading volumes on this counter, due to this reason, has been quite minimal, with Monday’s trading volumes reported at Rs 1.70 crore. These bonds are only traded on the NSE wholesale debt segment. The BSE debt platform is expected to list these bonds today.
Punters, mainly stock brokers, who had mopped up US-64 units from the exchanges earlier, betting on trading profits, are waiting on the sidelines to offload these securities to book substantial profits since they are expecting the prices to rise significantly due to demand-supply mismatch, said dealers.
Funds and institutions who are keen to purchase these units are not willing to deal in odd lots, (less than Rs 5 crore) and retail investors are finding it touch to get good quotes directly from the market.
"We had put in some purchase bids but could not get quotes for the same. Since these are still early days, retail investors are not quite aware of this exit window. Once the retail interest picks we expect good trading volumes, a private sector fund manager said, adding that some corporates have offloaded these bonds in the market as block deals.
"Banks, who hold US-64 units in large numbers, need to get due appprovals, sometimes even from the board, to sell these securities and which is why it is taking time. For banks, securities held in their hold-to-maturity category need to transferred to their trading portfolio in order to sell them," said an UTI official.
Govt yields dip life-low: Rumours of an open market operation by RBI within two days has pushed the yields on G-Secs to life-lows on Monday, in a lacklustre secondary debt market. The benchmark 10-year 9.81 per cent paper rose to 5.7156 per cent from a record low of 5.7040 per cent hit earlier in the day and slightly firmer than the previous close of 5.7108 per cent.