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Bond yields edge higher ahead of the 150-billion-rupee debt sale

17 Oct 2014 Evaluate

Bond yields edged higher as investors offloaded positions in bonds ahead of the 150 billion rupees debt sale later in the day. Besides, the uptick in global crude oil prices and rise in U.S. treasury yields also supported upside. However, gains in the rupee are limiting a sharp rise in bond yields

On the global front, U.S. Treasuries prices fell on Thursday on profit-taking after the prior day's rally as Wall Street stocks steadied. Meanwhile, Brent crude steadied around $86 a barrel on Friday after bouncing from near four-year lows as investors bought back into a market they saw as oversold in the short term.

Back home, the yields on new benchmark 8.40%- 2024 bonds were trading 1 basis point higher at 8.38% from its previous close of 8.37% on Thursday.

The benchmark five-year interest rate swaps were trading 2 basis points higher at 7.53% from its previous close of 7.51% on Thursday.

The government of India has announced sale of four dated securities of Rs 15,000 crore on October 17, 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 7000 crore, (iii) 8.32% Government Stock 2032 for a notified amount of Rs 3000 crore and lastly, (iv) 8.30% Government Stock 2042 for a notified amount of Rs 3000 crore respectively. 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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