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Bond yields spurt lacking OMO support

08 Feb 2012 Evaluate

Bond yields spurted in early trade on Wednesday as the Reserve Bank of India held back from announcing a debt buyback through open market operation on Tuesday. The central bank normally announces its debt buy via OMO on Tuesdays, after the market closes.

On the global front, US Treasury debt prices fell on Tuesday as investors set up for this week's $72 billion quarterly refunding and a safety bid waned following a report Greece was close to agreeing terms of a financial bailout. Meanwhile, Brent crude futures fell to near $116 a barrel on Wednesday, as uncertainty over Greece's ability to resolve its debt problems weighed on sentiment and traders narrowed the benchmark's premium to US crude

The yields on 10-year benchmark 8.79% - 2021 bonds were at 8.26%, sharply higher than Tuesday's close of 8.19%.

The benchmark five-year interest rate swaps were at 7.38% from its previous close of 7.33% on Tuesday.

The Reserve Bank of India has announced the auction of 364-day and 91-day Government of India Treasury Bills for notified amount of Rs 4,000 crore and Rs 9000 crore respectively. The auction will be conducted on February 08, 2012 using 'Multiple Price Auction' method.

The Government of India have announced the sale (re-issue) of three dated securities for Rs 12,000 crore on February 10,2011  (i) “8.19 percent Government Stock 2020” for a notified amount of  Rs 3,000 crore (nominal) through price based auction, (ii) “9.15 percent Government Stock 2024” for a notified amount of  Rs 6,000 crore (nominal) through price based auction and (iii) “8.97 percent Government Stock 2030” for a notified amount of Rs 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, Fort, Mumbai on February 10, 2012 (Friday).

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