The long-term bonds
would give pension funds "a few extra points of returns amid fallying yields," the report said.
It also noted as local interest rates begin to fall, long-term financing instruments can be expanded from the domestic market, rather than short-term borrowing, as well as expanding the issuance of medium and long-term bonds
, instead of bills, to increase the life of debt and reduce the risk of refinancing existing indebtedness.
Investors are spooked by a scenario known as the "inverted yield curve," which occurs when the interest rates on short-term bonds are higher than the interest rates paid by long-term bonds
. What it means is that people are so worried about the near-term future that they are piling into safer long-term investments.
Unlike in regular auctions where interest rates on short-term bills and long-term bonds
are determined by bids of banks, the rates on debt instruments sold over-the-counter are set by the Treasury.
Similarly, the SPV could launch medium- and long-term bonds
targeting mutual funds and pension funds respectively.
Global Banking News-January 15, 2018--State Bank of India announces capital raising for affordable housing through long-term bonds
The additional issuance of bonds in the ultra-long sector is in keeping with the commitment that the Government made in Budget 2017 to reallocate short-term issuance towards long-term bonds
in order to lock in low funding costs and reduce refinancing risk.
Try using a time-based motive for investing in long-term bonds
. It'sobvious that long-term bonds
have higher risks as it's harder to predict the forthcoming of the market.
Tuesday, Government took another loan from the domestic creditors with long-term deadlines, from 10 to 15 years, and from the Ministry of Finance explained that these long-term bonds
are mainly issued on the request of the pension funds.
government long-term bonds
rose from 32.5% to 35% and totaled 91.3 bln AMD.
Under the first, more developed proposal, banks would undertake large obligations via long-term bonds
, which would be paid only if their operations are sound.
The Fed has held short-term interest rates near zero since late 2008 and is buying long-term bonds
to lower borrowing costs, boost growth and lower unemployment.