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Bond yields ebb on strong demand for govt bonds by FIIs

23 Dec 2014 Evaluate

Bond yields were trading lower on Tuesday, tracking lower oil prices, while strong demand from foreign investors at auction of un-utilized bond investment limits on Monday also aided sentiment. Foreign institutional investors on Monday put in bids of Rs 5,653 crore for debt securities of Rs 2,674 crore placed under the auction. The auction was held at the BSE ‘ebidXchange’ platform for allocation of investment limits in government debt securities.

On the global front, intermediate-debt underperformed long-dated bonds on Monday as investors prepared for new five-year and seven-year note supply, after the Treasury sold $27 billion in new two-year notes to solid demand. Meanwhile, Brent crude oil prices edged up on Tuesday following a volatile session the day before that saw contracts jump over 2 percentage points before falling back to not much more than $60 a barrel.

Back home, the yields on new 10 year Government Stock 2023 was trading 2 basis points lower at 7.94% from its previous close of 7.96% on Monday.

The benchmark five-year interest rate swaps was trading 3 basis points lower at 7.28% from its previous close of 7.31% on Monday.

The Sixteen State Governments have offered to sell 10 year securities by way of auction for an aggregate amount of Rs 15450  crore for Rs 15450 crore on December 23, 2014

The Government of India have announced the sale (re-issue) of the Government Stock worth Rs 14,000 crore through auctions to be held on December 26, 2014, including (i) 8.08 per cent GS 2022 for a notified amount of Rs 2000 crore, (ii) 8.15 per cent GS 2026 for a notified amount of Rs 6000 crore, (iii) 9.20 per cent GS 2030 for a notified amount of Rs 3000 crore and lastly, (iv) 8.30 per cent GS 2040 for a notified amount of Rs 3000 crore.

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