The fixed income market has given investors what they needed at a time when the equity portfolios were busy eroding investor's wealth. The interest rate order of India is likely to pose challenge to the managers of the fixed income securities, a far distant case roughly a year ago. All machineries of the financial system regulators, journalists, academics, researchers and even astrologers have to decide on a new course of action.

Indian interest rates have declinedsecularly over last couple of years. Ten- year GOI securities were traded at 14%YTM in 1995. Today they are trading at 6.0%. Interest rate on G-Secs have declined by almost 800 bps over last eight years. The declining interest rates have  benefited corporate bonds which have declined  from 19%+ for AAA rated company in 1995 to under 6.25%  now. The corporate bond yields have declined by a wider margin courtesy narrowing of spreads over gilts from 600 bps to less than 25-30 bps.  

This specular decline  in interest rates  has happened not  withstanding the foreign exchange prices of January 1998 and July 2000 ,  economic hardship post-international sanctions after the Pokhran nuclear bomb blast, global  melt down  post-9/11  and the fighting of direct and indirect war with Pakistan  through Kargil and Kalachuk. Interest rates have declined almost in a secular trend throughout these last eight years when fiscal deficit have kept on creeping in and has brought down India's international rating to junk status.

Debt,Debt Market,strategies,stock,Fixed income market,investors,Equity portfolios,Investors wealth,securities,Financial System regulators,international rating,Pokhran nuclear bomb blast,economic hardship,corporate bond,Indian interest rates,financial system regulators, journalists, academics, researchers.