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Bond yields edge lower on Tuesday

19 Jul 2011 Evaluate

Bond yields edged lower on expectations that the central bank was nearing the end of its tightening cycle, with a drop in global oil prices also aiding sentiment. The Reserve Bank of India has so far raised rates 10 times since March 2010 to fight stubbornly high inflation.

On the global front, prices of most U.S. treasuries held steady on Monday. However, investors sold 30-year bonds amid concerns over the U.S. deficit and lawmakers' inability to raise the federal debt ceiling. Oil prices fell on Monday due to growing fears of a sovereign debt default on either side of the Atlantic and on the possibility of another emergency stock release from the International Energy Agency.   

The yields on 10-year benchmark 7.80% - 2021 were trading lower by 3 basis points at 8.22% from its previous close of 8.25% on Monday.

The benchmark five-year interest rate swaps were down by 2 basis point at 7.46% from its previous close of 7.48% on Monday.

The Government of India announce the sale of three dated securities for Rs 12,000 crore on July 22, 2011, which is inclusive of (i) 8.07% Government Stock 2017” for a notified amount of Rs 4,000 crore (nominal), (ii) 8.08 percent Government Stock 2022” for a notified amount of Rs 5,000 crore (nominal) and (iii) 8.28 percent Government Stock 2027” for a notified amount of Rs 3,000 crore (nominal) through price based auctions. The auctions will be conducted using uniform price method.

Also, Five State Governments announce Auction of State Development Loans 2021 for Rs 5,250.000 crore on July 19, 2011.

The Reserve Bank of India has announced the auction of 91-day  and 182- day Government of India Treasury Bills for notified amount of  Rs 7,000 crore and Rs 3000 crore respectively. The auction will be conducted on July 20, 2011 using 'Multiple Price Auction' method.

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