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Bond yields trade range-bound, traders anticipate buyback

20 Dec 2011 Evaluate

Bond yields trading in a thin range as traders anticipated a buyback announcement from the central bank later in the day after the details of this week's scheduled Rs 12,000 crore debt sale were released. Further, bond yields have dropped 16 basis points in the last two sessions, after the central bank last week indicated that its next move was likely to be an easing as risks to economic growth have increased.

On the global front, longer-dated Treasuries prices gained on Monday as investors continued to flock to high quality debt ahead of year end, though intermediate dated notes underperformed after a new sale of two-year notes saw tepid demand. Meanwhile, US crude futures extended gains on Tuesday in early Asian trade on the risk of supply being disrupted from Kazakhstan, as oil workers protested for a third day in the Central Asian oil producer.

The yields on 10-year benchmark 8.79% - 2021 bonds were trading at 8.31% from its previous close of 8.33% on Monday.

The benchmark five-year interest rate swaps was at 6.84% from its previous close of 6.82%.

The Government of India have announced the sale (re-issue) of (i) “7.83 percent Government Stock 2018” for a notified amount of ` 4,000 crore (nominal) through price based auction, (ii) “8.79 percent Government Stock 2021” for a notified amount of ` 5,000 crore (nominal) through price based auction and (iii) “8.97 percent Government Stock 2030” for a notified amount of ` 3,000 crore (nominal) through price based auction. The auctions will be conducted using uniform price method. The auctions will be conducted by the Reserve Bank of India, Mumbai Office, Fort, Mumbai on December 23, 2011 (Friday).

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