Bond yields eased after touching a weak high level in previous session, as announcement of open market operation (OMO) on Friday, cheered investors. However, the surge of bond is capped on the concerns that the government will be holding an unscheduled debt auction next week, in order to rein in the ballooning fiscal deficit.
Consistent with the stance of monetary policy and based on the current assessment of prevailing and evolving liquidity conditions, the Reserve Bank of India (RBI) decided to conduct Open Market Operations by purchasing government securities for an aggregate amount of Rs 12,000 crore on February 24, 2012 through multi-security auction using the multiple price method.
On the global front, US Treasury debt prices jumped on Wednesday, as concerns Greece might not be able to avert a disastrous default despite a second financial bailout supported safe-haven bids for bonds. Meanwhile, Brent crude held steady near a nine-month high of about $123 on Thursday, as supply worries from heightened tensions between Iran and the West offset concerns that a slowdown in the global economy could curb oil demand.
The yields on 10-year benchmark 8.79% - 2021 bonds were lower at 8.18% from its previous close of 8.22% on Wednesday.
The benchmark five-year interest rate swaps were steady at the previous close of 7.38%.
The Government of India have announced the sale (re-issue) of (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 24, 2012 (Friday).
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