Debt Market

Meaning of Debt Market

 A Market where fixed income securities

of various types and features are issued
and traded is known as Debt Market.
Fixed Income securities include
securities issued by Central and State
Govt., Municipal Corporation, Govt.
Bodies, and Commercial Bodies such as
FIs, Bank, Public Sector, Public limited
Companies etc.
 Role of Debt Market
 Efficient mobilization and allocation of
financial and others resources in the
economy
 Financing the development activities of the
Govt.
 Transmitting system for the implementation
of various monitory and others policies of
the central bank of the country
 Facilitate the efficient liquidity management
in tune with the overall short and long term
objective of the economic planning
Price determination factors

 General Economic Conditions

 Money Market and Capital Market
condition
 Political and Social condition
 Credit quality of the issuer
 Interest rate prevalent in the market
 The rate of new issue
Advantages to Investor

 Steady Income
 Safety
 Risk free
 Advantages to financial
System
 Reduction of the borrowing cost
 Providing greater funding avenues to public
and private sector project.
 Efficient recourses from illiquid funds
 Development of heterogeneity of market
participant
 Assisting in the development of reliable yield
curve
Risk on Debt
 Default Risk
 Interest Rate risk
 Reinvestment Rate Risk
 Counter Party Risk
 Price Risk
Types of Securities

 Government Securities
 Public Sectors Bonds

 Private Sectors Bonds

Issuers Profile

Fixed income Securities can be issued by

almost by any legal entity like
 Corporate business houses,
 Banks and FIIs,
 Municipal corporation,
 Central and State Govt.
 Public Bodies,
 Statutory corporation.
Government
Securities Market

Pramod Kumar Patjoshi

Meaning of Government
Securities Market
 The marketable debt issued by the
government or semi Govt. bodies
which represent a claim on the Govt.
is known as Govt. securities or gilt-
edged securities. A redeeming
feature of this is that they are
consider to be a totally secure
financial instruments, as they ensure
of both capital and income.
Features of Govt. Securities
Market
 Agencies
 RBI’s special role
 Nature of Securities
 Liquidity Profile
 Tax Benefit
 Market
 Forms
 Participant
 Trading
 Issue Mechanism
Types of Trading

 Grooming
 Switching
 Auctioning
Types of Government Bonds

 Securities with fixed coupon rates

 Securities with variable coupon rates
(Floating Rate Bond)
 Zero coupon Bond
 Installment Securities
 Partly paid stock
 STRIPS
Importance of Gilt-edged
Market
 Viral Segment
 Profitable Avenue
 Regulated Speculation
 Ideal Financing
 Monitory Management
 Role of Central Bank
 Implementing Fiscal Policy
 Source of Liquidity
 Guaranteed Return
Thank You