Prudent Corporate Advisory Services Limited · NSE:PRUDENT
Prudent Corporate Advisory Services — Debt Investor Presentation (March 2010)
22 slides from Prudent Corporate Advisory Services's debt investor presentation, March 2010
Slide 1: An Update on the Global Financial Markets & Fixed Income Market Outlook
FOR PRIVATE CIRCULATION ONLY An Update on the Global Financial Markets & Fixed Income Market Outlook March 2010 Dhawal Dalal, Head – Fixed Income
Slide 2: Global Financial Markets – An Update
Global Financial Markets – An Update • World economy to continue to recover & to deliver above-trend growth in 2010 GDP Forecast 2009 2010 2011 USA -2.4% 3.1% 3.0% Euro Zone -4.0% 1.3% 1.5% BRICs 5.1% 8.3% 7.9% World -0.7% 4.2% 4.3% • Policy rates in the to remain low in the developed world in 2010.
Slide 3: The USA – An Economic Update
The USA – An Economic Update • US Manufacturing Sector is recovering well on back of fiscal stimulus. However it may turn sluggish in H2 • US labor market conditions to deteriorate further in the near-term • US Policy rates to remain low for the most part of 2010 • The dollar has done well recently
Slide 4: Manufacturing-led Growth is Gaining Momentum
Manufacturing-led Growth is Gaining Momentum 3 Source: Bloomberg
Slide 5: The Dollar May Come Under Pressure
The Dollar May Come Under Pressure 4 Source: Bloomberg
Slide 6: Financial Markets Back to Normal?
Financial Markets Back to Normal? 5 Source: Bloomberg
Slide 7: Euro Zone – An Economic Update
Euro Zone – An Economic Update • Rebound in the sentiment across the region on back of manufacturing led growth • Although divergence is visible • Inventory cycle is turning positive while exports outlook is improving fast • Market expects Greece sovereign debt problem will find a solution in the eu
Slide 8: Euro Zone PMI is Improving Gradually
Euro Zone PMI is Improving Gradually 7 Source: Goldman Sachs
Slide 9: Asia – An Economic Update
Asia – An Economic Update • Inflationary pressures are building gradually in many parts of Asia • Output gaps are closing quickly Countries At Peak Now China -4.7 -0.5 Hong Kong -6.7 -3.8 India -1.5 0.5 South Korea -4.2 -0.4 Malaysia -6 -1.8 Taiwan -7.2 -2.2 • Asian Yield Curves are steep from the h
Slide 10: Asian Monetary Policy Outlook for 2010
Asian Monetary Policy Outlook for 2010 Country Benchmark Current Policy Amount of Time Period Rates Tightening Expected China 12M 5.31% pa 75 bp April – June India Reverse Repo 3.25% 100 April, July Indonesia Reference Rate 6.5% 100 June, July Malaysia O/N Policy Rate 2.25% 75 Commenced on March 3,1
Slide 11: Asian Yield Curves – Flattening Ahead
Asian Yield Curves – Flattening Ahead Country 5Y OIS – 2Y OIS Spread Long-term Average China 86 bp 60 bp Hong Kong 113 84 India 133 45 Malaysia* 96 86 Singapore 93 64 South Korea 53 35 Thailand 111 104 10
Slide 12: India - Fixed Income Market Update
India - Fixed Income Market Update • The Union Budget was along the expected lines • Positives: • The gross borrowing of Rs. 4,57,000 crore in FY 2010-11 is as per the market expectations • The Finance Minister has not altered any Capital Market rates • Negatives: • The Union Budget appears to be in
Slide 13: India – Government Borrowing for FY2010-11
India – Government Borrowing for FY2010-11 Item FY2009‐10 FY2010‐11 Gross Borrowing Rs. 4,51,100 crore Rs. 4,56,000 crore Less: MSS De‐sequestering (Rs. 33,000 crore) Nil Gross Issuance @ Centre Rs. 4,18,100 crore Rs. 4,56,000 crore Less: Maturities (Rs. 53,100 crore) (Rs. 1,14,000 crore) Net Issuan
Slide 14: India – Debt Distribution
India – Debt Distribution 13 Source: Bloomberg
Slide 15: Our Fixed Income Outlook for H1 – 2010
Our Fixed Income Outlook for H1 – 2010 • The RBI to initiate the rate tightening cycle soon to contain inflationary pressures • Bond Market expects the RBI to hike Reverse Repo Rate by 50 to 75 bp by July 2010 • The new government borrowing program to put upward pressure on the bond yields • We expe
Slide 16: Money Market Rates May Trend Down in the Near Term
Money Market Rates May Trend Down in the Near Term 15 Source: Bloomberg
Slide 17: Benchmark 10Y Government Bond Yield Movement – Closer to the Peak?
Benchmark 10Y Government Bond Yield Movement – Closer to the Peak? 16 Source: Bloomberg
Slide 18: Spread Between 1Y T-Bill and 10Y Govt Bond is Looking to Correct
Spread Between 1Y T-Bill and 10Y Govt Bond is Looking to Correct 17 Source: Bloomberg
Slide 19: What Could Go Wrong?
What Could Go Wrong? • A “Double Dip” in the global economy • This will force the government to embark on government spending to the detriment to the financial health • Return to the Risk Aversion – Bond yields may go down in the G7 but may head higher in India as government will be forced to roll b
Slide 20: What Should An Investor Do?
What Should An Investor Do? • Stay invested at the short-end of the money market curve till June 2010 to protect the fixed income portfolio • Begin to add duration in the fixed income portfolio once 10Y bond yield approach 8.25% pa 19
Slide 21: DSP BlackRock Fixed Income Funds Under Focus
DSP BlackRock Fixed Income Funds Under Focus 20
Slide 22: Disclaimers
Disclaimers DSP BlackRock Liquidity Fund (DSPBRLF) is an open ended income Scheme, seeking to generate a reasonable return commensurate with low risk and a high degree of liquidity, from a portfolio constituted of money market securities and high quality debt securities. Asset Allocation: Money mark
Prudent Corporate Advisory Services — Debt Investor Presentation (March 2010) on 6ix