GLOBAL

• A Hong Kong-based toll road company will sell renminbi-denominated bonds to international investors
this week. Plans to raise at least Rmb1bn ($150m, €120m, £100m) from institutional investors to
finance the construction of expressways in China’s Pearl River Delta region.

• Investors fear rising risk of US regional default: Investors are worried that the risk of default for US
local governments is growing, amid signs that some regions are facing the same type of difficulty in
curbing pension and budget deficits as some eurozone countries. The yield attached to some forms
of infrastructure municipal bonds has risen relative to US Treasury bonds because of fears that cash-
strapped local governments will struggle to repay these loans.

• AgBank on course for record $22.1bn IPO: Agricultural Bank of China is set to raise up to $22.1bn in
the world’s largest initial public offering, underscoring investors’ faith in the prospects for the Chinese
economy.

• 10 Y US Treasury Yields – 2.93%, UK 3.35%, Germany 2.86%

• Crude-oil futures fell Tuesday for the sixth consecutive session as the market failed to sustain an
early rally in light of worries about slowing economic growth. Currently trading at 72..07

• Japan’s 30-year bonds fell for a third day on speculation demand will weaken at an
auction of the securities tomorrow after the extra yield offered by the debt over 10-year
rates narrowed to the least in a year. The Ministry of Finance will sell 600 billion yen
($6.86 billion) in 30-year bonds after auctioning 2.2 trillion yen of 10-year debt
yesterday. The difference in yield, or spread, between 10- and 30-year yields shrank to
74 basis points on July 2, the lowest since May 2009
• Prime Minister Vladimir Putin is seeking to cut the amount of international loans owed
by Russian companies more than 50 percent with tax breaks that would increase the
allure of bank credit denominated in rubles. The government aims to reduce foreign-
currency debt to 20 percent of total corporate borrowing from 42 percent by doubling
the amount of ruble interest payments eligible for tax deductions, said State Duma
Deputy Natalia Burykina of Putin’s United Russia party, who helped draft the plan.
Companies have $294 billion of international and 12.8 trillion rubles ($413.5 billion) of
local loans,

• China buys Japan Debt to Diversify $6.17 bn

• Bonds of financial firms, led by Bank of America debt, led gains in light corporate bond trading on
signs of relief in the European banking sector. The CDX.IG-14 index tightened by about 4 bps to 122
bps.
• High-yield corporate bond spreads have widened to more than 700 bps now from about 550 bps in
late April.
• U.S. stocks pulled back after an early rally, leaving indexes with relatively mild gains as buying
interest evaporated in the afternoon.
• Gold Fell below $1200
• Non-Mfg index: Forecast 55, actual 53

• The U.S. service sector expanded in June for a sixth straight month but the rate of growth slowed to
the lowest pace since February,

LOCAL
• April-June direct taxes up 15.49%: to Rs 68,675 crore, indicating higher corporate earnings.

• Sensex surges 173pts: Taking cues from the Chinese markets, the Metal stocks today led the gains
followed by the banks. The IT and realty stocks were also not left far behind

• ECB market opens up; firms rush to raise 5-yr loans: As the overseas debt market opens up,
companies are using the opportunity to raise long-term debt (five-year funds) abroad, as they expect
local interest rates to go up. Recently, Reliance Industries is said to have tied up over $1 billion in
overseas debt, while State Bank of India is raising a similar sum. Tata Motors plans to raise $1 billion
through a combination of debt, equity and convertibles, while JSW Steel is looking at raising $200
million-$250 million via overseas debt.

• The domestic industry plans to raise Rs 40,000 crore -- meant for adding capacity and retiring debts
-- through qualified institutional placements (QIPs) in the remaining six months of 2010, a study said
today. It noted that 50 companies, including Tech Mahindra, Essar Oil and Ansal Properties and
Infrastructure, have already taken approvals for QIPs from their boards

• Finance Minister Pranab Mukherjee said on Tuesday he and Reserve Bank of India (RBI) Governor
Duvvuri Subbarao would meet on July 23 as usual ahead of the central bank's monetary policy review
on July 27

• Education loans likely to be capped at 2% above base rate

• 10 Y GSec at 1 week high of 7.61%, T-Bill auctions 91 day and 182 days today

• To set up solar and wind power panels across the country. State-run Indian Oil Corporation (IOC) plans to set up
solar power panels and power plants at its over 18,100 retail outlets across the country at a cost of Rs 500 crore.

MARKETS
DOW JONES INDUS. AVG 9,743.62 57.14 0.59% 07/06

S&P 500 INDEX 1,028.06 5.48 0.54% 16:59

NASDAQ COMPOSITE INDEX 2,093.88 2.09 0.10% 07/06

FTSE 100 INDEX 4,965.00 141.47 2.93% 07/06

DAX INDEX 5,940.98 124.78 2.15% 07/06

NIKKEI 225 9,284.24 -53.80 -0.58% 21:16

EUR-USD 1.2608 -0.0018 -0.1453% 21:47

GBP-USD 1.5143 -0.0007 -0.0465% 21:47

USD-JPY 87.5240 0.0042 0.0049% 21:47

AUD-USD 0.8494 -0.0032 -0.3812% 21:47

USD-CAD 1.0557 0.0013 0.1195% 21:47

USD-CHF 1.0619 0.0027 0.2518% 21:47

LAF Borrowing: 48000 Cr

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