Retirement funds likely to shy away from corp bonds

Domestic corporates, which used to largely depend upon retirement funds as investors for their bond programmes, may find this demand dwindling away.
Proposed investment guidelines for retirement funds issued by the finance ministry want to do away with the sub-limit of 10% on investments in corporate bonds. In recent times, corporate bonds have been offering the maximum yield, over what government bonds were offering. The yield differential between a five-year ‘AAA-rated’ corporate bond and a government bond of a similar tenure is currently around 191 basis points.

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