Documente Academic
Documente Profesional
Documente Cultură
Interest Rates
For Power Grid Corporation of India Ltd
Summer internship
By:
Madhusudan Partani
PGDM-18
FORE School of Management
Flow of Presentation
Objectives
Study of Bonds
For FSA, the results of last 8 years and FY 2008-09 is
considered
For Understanding the procedural aspects, PG XXX
issue is studied
Only 5 Bonds are considered for Analysis under fixed
and floating rates.
FRBs of other issuers and also Gsec and few PSU
Bonds are also studied
Data
Primary
Working manuals of Company
Approval letters, Files, Workings,
Data pertaining to Bonds issue
Discussion with merchant Banker and Internal staff of the co.
Secondary
FIMMDA and Reuters
Balance Sheets of last 8 years
IndiaStat.com and also NSE WDM Segment
Objectives
Capital Composition
Sources and Applications of Funds
Ratios
Cash Flow Analysis
ØTo understand the financial performance and position
of the company
Capital Compostion
Cash Flow Analysis
200903 Change 200803
Cash and Cash Equivalents at End of the year 2428.88 30% 1865.59
Record date
BO Position
Registrar and Transfer Agents ( RTA)
Demat and Physical Holding
DP s
PAN
Master File
List o Beneficiaries sent to Bank
Single Investor
Characteristics of Bonds
Yield
Current
YTM
Duration
Macaulay's
Modified
Convexity
Yield
Current Yield
Yield to Maturity
Annualised yield
Yield to Call/ Yield to Put
Duration and Convexity
Fixed rates
Floating rates
FRBs
Computation of Floating Rates
Fixed vs Floating
Rate Determination
Fixed: Book Building for Coupon Rate
Floating: Book Building for Spread
GOI
GOI FLOATING RATE +0.13% 2011
GOI FLOATING RATE +0.50% 2015
Assumptions
Reference Rates
Average Monthly yield of 10 Year GSec preceding the reset
month
Average Yield of 10 year GSec for 12 months preceding the
reset month.
Average Yield of 10 year GSec for 6 months preceding the
reset month ( for Semi Annual Intrest Payment)
Average of 1 Year GSec for the past 3 days preceding the reset
date.
Floating Rate under Reference Rate of Average yield of 1 Year
Gsec –PG VIII
17.595 12.57485
Floating Rate under Reference Rate of Average yield
of 10 year Gsec Bond XIII- Opt-II
Computation of Spread
68.82488 74.81915
Summary
Average Yield for 10Yrs GSec ( Preceding
Interest Payment )
(Rs. Crs)
Bond Maturity Interest paid Spread Under Fixed Under Savings
till Floating
VIII 14 Apr-10 1.00% 18.009 15.29789 2.71111
Term
Short Duration: Fixed
Long: Floating
Coupon Rate
Market Condition
XII Issue ( Unfavorable Market Condition)
Quantum of Loan
Repayment Structure
Term
Coupon Rate
Findings and Recommendations
LBut
L Cannot take advantage of Interest Fall
L True market situation is not reflected in interest payment
§ Is to be used when market is very favourable.
Cont
Floating Rate
Advantage of Fluctuations
Returns on security is reflected by Market conditions
Suitable in case if market is not favorable at the time of issue