ET: IT firms go STRIPS to hedge Re
From the Economic Times: IT firms go STRIPS to hedge Re
The choice is clear when you face a runaway currency or a rapidly rising one. It’s tougher when you fear it could go either way — dip a little, rise, move within a band and then slowly rise and keep on rising in the next few years. What do you do then? India Inc has found a way.
Under the tailormade transaction known as STRIPS in market parlance, the corporate can settle the dollar every week, fortnight or month over the next few years, through what’s called a “series of options”. For years few bothered to use it, but in recent weeks there has been a flurry of activity. In the last one month, deals worth $100-200 million have been struck almost everyday.
. . . in the long term, that’s four to five years, several corporates are bullish on India and the rupee and expect the currency to gain with higher growth; but in the next six months to one year, they think the rupee will be range bound.
Here’s a 5-year chart for the INR:USD exchange rate via Kshitij; how many of these corporates could have predicted back in 2002 that the rate would go from 49 to 40?
Given the response from IT companies last quarter when the rupee quickly moved from 43 to 40 versus the dollar, I would think that even their short-term predictive abilities are poor!
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September 10th, 2007 at 5:21 pm
Kaushik,
Please accept my apologies for being off-topic. I wanted to check with you regarding the bond market and where can one get details on the corporate bonds ? I see that the bond coupon rates are at 10% which sounds like a very good rate to get into ?
From Business - Standard :
“Most of the issuers who had postponed bond issues earlier are expected to re-enter this week. This includes Power Finance Corporation (Rs 500 crore for 3 year and 5 year at 9.70 per cent and 9.85 per cent, respectively) and Rural Electrification Corporation (10-year bonds at 9.85 per cent). State Bank of India is likely to raise around Rs 2,500 crore through upper tier II issues for 10 years at 10.10 per cent. Yes Bank is in the process of issuing perpetual bonds at 11 per cent. “
September 10th, 2007 at 5:46 pm
Try these:
India Bond Watch: http://www.indiabondwatch.com
[BondDB]
RBI Monthly Bulletin:
http://rbi.org.in/scripts/BS_ViewBulletin.aspx
RBI Weekly Statistical Supplement: http://rbi.org.in/scripts/BS_ViewWSS.aspx
[Look for Commercial Paper]
September 19th, 2007 at 2:21 pm
Thanks for the link, i too have been looking around for this. :p