Bond yields ease on RBI’s OMO offer

08 May 2012 Evaluate

Bond yields eased on Tuesday as the market cheered the central bank's move to buy bonds via an open market operation. Consistent with the stance of monetary policy and based on the current assessment of prevailing and evolving liquidity conditions, the Reserve Bank has decided to conduct Open Market Operations by purchasing government securities for an aggregate amount of Rs 12,000 crore on May 11, 2012 through multi-security auction using the multiple price method.

On the global front, US Treasury prices were steady in Asia on Tuesday, taking a breather from their recent rally that pushed benchmark yields to three-month lows as investors positioned for the first of this week's offering of $72 billion in coupon-bearing debt by the US Treasury. Meanwhile, Brent crude held steady above $113 a barrel on Tuesday, recovering slightly after four straight sessions of losses caused by fears that the slowing economies of the United States and the euro zone would reduce oil demand.

Back home, the yields on 10-year benchmark 8.79% - 2021 bonds were trading 6 basis points lower to 8.63% from its previous close of 8.57% on Monday.

Five State Governments have announced auction of State Development Loans 2022 for Rs 5150.00 crore on May 8, 2012.

The Government of India has announced the sale of four dated securities for Rs 15,000 crore, which include, (i) “8.24 percent Government Stock 2018” for a notified amount of Rs 4,000 crore (nominal) through price based auction, (ii) “8.79 percent Government Stock 2021” for a notified amount of Rs 7,000 crore (nominal) through price based auction (iii) “8.28 percent Government Stock 2027” for a notified amount of Rs 2,000 crore (nominal) through price based auction and (iv) “8.33 percent Government Stock 2036” for a notified amount of Rs 2,000 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 May 11, 2012 (Friday).

The Reserve Bank of India has announced the auction of 91 and 182-day Government of India Treasury Bills for notified amount of Rs 9,000 crore and Rs 5000 crore respectively. The auction will be conducted on May 9, 2012 using 'Multiple Price Auction' method.

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