When you invest in a fixed deposit, the interest you receive is taxed as income. At the highest tax bracket, you pay 30% on that interest. That means a bank FD that gives you 10% really only gives you 7%. Even if you a a longer term investor in the FD, you pay interest every [...]

Posted in Bonds, Credit Repair Comments Off

Data from CCIL shows that last Friday, the 10 year bond yield inched above 9%, which is inching towards the high of 9.35% set in July 08. (Note: that was just one month before it reversed) The spreads are incredibly tight, but they’ve been that way earlier, in 07-08 as well. For yields to fall, [...]

Posted in Bonds, ChartOfTheDay, Credit Repair Comments Off

Much has been made of the US 30 yr bonds now returning more than stocks. India is new in terms of data, and I acquired 20+ year bond index data from CCIL (only since 2004) and I plotted the five year returns, since November 2006, of the Total Returns Index in both cases. You need [...]

Posted in Bonds, ChartOfTheDay, Charts, Credit Repair, Nifty Comments Off

Bloomberg posts an article about how in the last 30 years, bonds have beaten stocks. But turn the clock back 30 years ago, and what do you find? In 1981, the Volcker move had taken interest rates – and thus yields – to big highs. The 30 year was available at 15% yields, which means [...]

Posted in Bonds, Credit Repair, Stocks Comments Off

From CNBC: Brazil’s and India’s government yield curves are inverting, a condition in which short-term rates rise above longer yields. Historically, such an inversion almost invariably precedes a recession, as investors temporarily accept lower long rates in anticipation of the decline in yields that typically accompanies an economic downturn. (HT: Deepak Singh) At this point [...]

Posted in Bonds, Credit Repair, InterestRates Comments Off

The short-term government Treasury Bill auctions, conducted every wednesday, have dramatically increased the interest rate that the government is paying for short term borrowing. In the 11,000 cr. auction of the 91 day T-Bills (8,000 cr.) and 364 day T-Bills (3,000 cr.) the cost now beyond 8.1%. Look at the yield charts over 10 years: [...]

Posted in Bonds, Credit Repair Comments Off

Quick post about CD yields today. CDs are Certificates of Deposit, trade in the fixed income markets at sizes of a crore or more, and are issued by banks. Think of them as big fixed deposits. This data is for 29 March 2011. (Legend – size of the ci…

Posted in Bonds, Credit Repair, FixedIncome Comments Off

SBI’s four bonds listed today. First question: Why are there four bonds? Well, each of the two types – 10 and 15 years – had two options: for retail (individuals, 5 lakhs or less) and the rest. Also see: "SBI Will Sell Bonds at 9.95%" &#1…

Posted in Bonds, Credit Repair, SBI Comments Off

State Bank of India has a new bond issue out (Shelf Prospectus). Size: Upto 10,000 crores from retail, but official issue size is 2,000 crores. Listed: Yes, on the NSE/BSE. Interest rates: 9.95% for retail on the 15 year bonds, and 9.75% fo…

Posted in Bonds, Credit Repair, SBI Comments Off

On the lines of the IFCI Infra Bonds , Larsen and Toubro have Infra bonds out for subscription too, which save you tax upto 20,000 per year. This is separate from the 100,000 limit on 80C investments. (Technically, it’s the 80CCF deduction, if you wa…

Posted in Bonds, Credit Repair Comments Off