Bond yields rise on inclusion of new 10-year benchmark in Rs 15,000 crore debt auction

05 Jun 2012 Evaluate

Bond yields edged higher after government included new 10 year government stock 2022, in the sale of Rs 15,000 crore debt sale auction on June 8, 2012, which would lead to less trading of the existing 8.79% 2021 paper.

On the global front, US Treasury bond yields edged higher in Asia on Tuesday, as investors booked profits ahead of emergency G20 talks to address the euro zone's deepening debt crisis. A group of G-7 finance ministers and central bankers will hold a teleconference on Tuesday to discuss developments in the euro-zone, where Spain is expected to be in focus. Meanwhile, weaker dollar and hopes that the world's leading economies will take new action to tackle the euro zone's debt crisis shored up Brent crude prices, which rebounded for the second consecutive session on Tuesday.

Back home, the yields on 10-year benchmark 8.79% - 2021 bonds were trading 2 basis points higher at 8.36% from its previous close of 8.34% on Monday.

The benchmark five-year interest rate swaps was trading flat at previous closing levels of 7.27%.

The Government of India announced the sale of four dated securities for Rs 15,000 crore on June 8, 2012, which includes, (i) “8.24 percent Government Stock 2018” for a notified amount of Rs 3,000 crore (nominal) through price based auction, (ii) “New 10 year Government Stock 2022” for a notified amount of Rs 7,000 crore (nominal) through yield based auction, (iii) “8.97 percent Government Stock 2030” for a notified amount of Rs 3,000 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, Mumbai Office, Fort, Mumbai, on June 08, 2012 (Friday).

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 9,000 crore and Rs 5,000 crore respectively. The auction will be conducted on June 06, 2012 using 'Multiple Price Auction' method.

Meanwhile, six state governments announced auction of state development loans 2022 for Rs 4,005.00 crore on June 5, 2012.

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