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Bond yields tread water ahead of Rs 12000 crore debt auction

19 Sep 2014 Evaluate

Bond yields were treading water as traders preferred to be on the sidelines ahead of Rs 12,000 crore worth debt auction on Friday. The yields were also witnessing some consolidation after dropping to its lowest level in more than 11 months on Thursday on hopes foreign investors would continue to bet on India despite some concerns about US interest rates.

On the global front, U.S. Treasury debt prices turned down on Thursday, with investors driving some shorter-maturity yields to highs not seen since 2011 a day after the Federal Reserve raised forecasts for some interest rates. Meanwhile, brent crude dropped towards $98 per barrel on Thursday, pressured by a stronger dollar on fears about a looming U.S. interest rate hike and a steep spike in U.S. crude stocks.

Back home, the yields on new benchmark 8.40%- 2024 bonds were trading steady at Thursday’s close of 8.45%.

The benchmark five-year interest rate swaps were trading steady at Thursday’s close of 7.86%.

The Government of India have announced the sale (re-issue) of four dated securities for Rs 12,000 crore on September 19, 2014, including (i) 8.27% Government Stock 2020 for a notified amount of Rs 2000 crore, (ii) 8.40% Government Stock 2024 for a notified amount of Rs 6000 crore, (iii) 8.32% Government Stock 2032 for a notified amount of Rs 2000 crore and lastly (iv) 9.23% Government Stock 2043 for a notified amount of Rs 2000 crore respectively.

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