Bond yields edge lower on emergence of buying post FM’s assurance

18 Sep 2012 Evaluate

Bond yields edged lower as buying emerged post Finance Minister P Chidamabaram assured that there will be no rollback in the recent reform measures announced by the government. Further, bonds are expected to remain supported on improved liquidity after Rs 17,000 crore from the cash reserve ratio cut of 25 basis points, which will be released on Sept 22.

On the global front, US 10-year Treasuries rose in Asian trade on Tuesday as investors stepped in to buy, attracted to the higher yields seen in the wake of a recent sell-off. The 10-year yield had hit a four-month high on Friday as investors dumped safe haven debt and flocked to risky assets after the Federal Reserve launched a new round of aggressive monetary stimulus. Meanwhile, Brent crude futures edged sub $114/ barrel mark as investors weighed the impact of the Federal Reserve's open ended stimulus push on oil demand and eyed China's next step to boost its economy.

The yields on 10-year benchmark 8.79% - 2021 were trading little lower at 8.18% from its previous close of 8.20% on Monday.

The benchmark five-year interest rates edged 2 basis points lower at 7.19% from its previous close of 7.21% on Monday.

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 5,000 crore and Rs 7,000 crore respectively. The auction will be conducted on September 20, 2012 using 'Multiple Price Auction' method.

The Government of India have announced the sale (new & re-issue) of four dated securities for Rs 15,000 crore, which includes (i) “8.19 percent Government Stock 2020” for a notified amount of Rs 4,000 crore (nominal) through price based auction; (ii) “New 13 years Government Stock 2025” for a notified amount of Rs 7,000 crore (nominal) through yield based auction; (iii) “8.28 percent Government Stock 2032” for a notified amount of Rs 2,000 crore (nominal) through price based auction; and (iv) “8.83 percent Government Stock 2041” 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 September 21, 2012 (Friday).

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