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Bond yields edged lower as foreign banks pour in their money into debt markets

03 Sep 2014 Evaluate

Bond yields edged lower as foreign banks, extending their buying streak for fourth consecutive session, bought debt worth $159.2 million on Tuesday. Further, a fall in Brent crude was also aiding the sentiment. The yields had ebbed in previous trading session too amidst speculation that government may increase the investment limits for foreign portfolio investors, bringing alive debt markets that have stagnated over the past couple of months.

On the global front, U.S. Treasuries yields rose on Tuesday after uncertainty as to whether the European Central Bank would announce more stimulus measures at a meeting this week led traders to take profits from last month's rally. Meanwhile, brent crude rose towards $101 a barrel on Wednesday, pulling away from a 16-month low hit in the previous session, supported by encouraging U.S. manufacturing data.

Back home, the yields on new benchmark 8.40%- 2024 bond was trading 2 basis points lower at 8.50% from its previous close of 8.52% on Tuesday.

The benchmark five-year interest rate swaps were trading steady at its Tuesday’s close of 8.00% on Wednesday.

The Reserve Bank of India has announced the auction of 91 and 182 days Government of India Treasury Bills for notified amount of Rs 8,000 crore and Rs 5000 crore respectively. The auction was conducted on September 03, 2014 using 'Multiple Price Auction' method.

The Government of India has announced the sale (re-issue) of four dated securities for Rs 12,000 crore on September 5, 2014, including (i) 8.27% Government Stock 2020 for a notified amount of Rs 2000 crore, (ii) 8.60% Government Stock 2028 for a notified amount of Rs 6000 crore, (iii) 9.20% Government Stock 2030 for a notified amount of Rs 2000 crore and lastly (iv) 8.30% Government Stock 2042 for a notified amount of Rs 2000 crore. The auctions will be conducted using multiple price method. Up to 5% of the notified amount of the sale of the stocks will be allotted to eligible individuals and Institutions as per the Scheme for Non-Competitive Bidding Facility in the Auction of Government Securities.

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