Reliance Industries will bet big on 5-year bonds before RBI
According to one of the people, the company bought about $270 million worth of state bonds from a state-run bank, with others saying the total purchases could exceed $1 billion over the past few days based on brokerage orders and trade deals. Is. Central Bank Forum. People asked not to be identified as the details are private.
Buying by Reliance blew through trading rooms in Mumbai, helping five-year sovereign bonds outperform as banks and brokerages sought to fulfill orders. They may reflect the company’s effort to find the safest part of the yield curve as expectations grow that the Reserve Bank of India will tighten monetary policy soon.
A Reliance Industries spokesperson did not immediately respond to an emailed request for comment.
The people said the company, which was buying a mix of sovereign and local government debt maturing in 2026, bought the debt through the central bank’s dealing platform as well as through direct deals with holders.
The yield on the 5.63% 2026 bond fell four basis points to 5.68% this week, surpassing the decline in the benchmark 10-year bond.
Reliance, controlled by Asia’s richest man Mukesh Ambani, had cash and equivalent assets of 2.6 trillion ($35 billion) as of September 2021, according to a financial presentation. Last year, Reliance made a similar bet in corporate bonds of similar maturity.
The buying comes ahead of an RBI meeting on December 8, which will be keenly watched by investors to see what steps the central bank takes to normalize pandemic-era policy settings after suspending bond purchases last month. IDFC Asset Management said last month that they are “very overweight” over their nearly five-year tenure, in the hope that they will be less affected by the rate hike.
Governor Shaktikanta Das has repeatedly assured the markets that bringing economic growth back strongly is paramount and that he will ensure adequate liquidity. Nevertheless, rising inflation globally has caused swap markets to rapidly increase rates.
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