February 22, 2013 February 25, 2013 - AMFI

methods of security issuance, and innovation in the structure of instruments have taken
place; and there has been a significant improvement in the dissemination of market
information. There are three main segments in the debt markets in India, viz., Government
Securities, Public Sector Units (PSU) bonds, and corporate securities. A bulk of the debt
market consists of Government Securities. Other instruments available currently include
Corporate Debentures, Bonds issued by Financial Institutions, Commercial Paper,
Certificates of Deposits and Securitized Debt. Securities in the Debt market typically vary
based on their tenure and rating. Government Securities have tenures from one year to
thirty years whereas the maturity period of the Corporate Debt now goes upto sixty years
and more (perpetual). Perpetual bonds are now issued by banks as well. Securities may be
both listed and unlisted and there is increasing trend of securities of maturities of over one
year being listed by issuers. While in the corporate bond market, deals are conducted over
telephone and are entered on principal-to-principal basis, due to the introduction of the
Reserve Bank of India's NDS- Order Matching system a significant proportion of the
government securities market is trading on the new system. The yields and liquidity on
various securities currently are as under:
Issuer
Instrument
Maturity Yields (%)
Liquidity
GOI Treasury Bill 91 days 7.94-7.95 High
GOI Treasury Bill 364 days 7.76-7.82 High
GOI Short Dated 1-3 Yrs 7.75-7.80** High
GOI Medium Dated 3-5 Yrs 7.75-7.89** High
GOI Long Dated 5-10 Yrs 7.89-7.91** High
Corporates Taxable Bonds (AAA) 1-3 Yrs 8.80-9.00*** Medium
Corporates Taxable Bonds (AAA) 3-5 Yrs 8.78-8.80*** Low to medium
Corporates CPs (A1+) 3 months 8.64-8.77* Medium to High
Corporates CPs (A1+) 1 Yr 9.10-9.12* Medium
*Money Market yield
**Semi-annual yield
***Annualised yield
Fixed Income securities
The AMC aims to identify securities, which offer superior levels of yield at lower levels of
risks. With the aim of controlling risks rigorous in depth credit evaluation of the securities
proposed to be invested in will be carried out by the investment team of the AMC. The
credit evaluation includes a study of the operating environment of the issuer, the past track
record as well as the future prospects of the issuer, the short as well as longer-term
financial health of the issuer. Rated debt instruments in which the Scheme invests will be
of investment grade as rated by a credit rating agency. The AMC will be guided by the
ratings of such Rating Agencies as approved by SEBI to carry out the functioning of Rating
Agencies.
In addition, the investment team of the AMC will study the macro economic conditions,
including the political, economic environment and factors affecting liquidity and interest
rates. The AMC would use this analysis to attempt to predict the likely direction of interest
rates and position the portfolio appropriately to take advantage of the same.
The Scheme could invest in Fixed Income Securities issued by government, quasi
government entities, corporate issuers, structured notes and multilateral agencies in line
with the investment objectives of the Scheme and as permitted by SEBI from time to time.
Scheme Information Document
ICICI Prudential Fixed Maturity Plan – Series 66 – 413 Days - Plan G
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