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Markets and Finance
Borrowing plan: States edge out corporates from bond market

Rising state government borrowing has depressed sentiment in the market with investors staying away from investing in central government securities for fear of rising valuation-linked losses. The supply of state paper, considered high-quality because of government backing, is raising yields across bonds. It has pushed up sovereign bond yields and, as a result, threatens corporate bond yields. Incessant supply means the private sector is elbowed out from the market by states. At a time when banks are not lending freely to companies, such crowding out does not augur well for them.

News Source:- http://www.business-standard.com/article/finance/borrowing-plan-states-edge-out-corporates-from-bond-market-118041600045_1.html