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Bond yields decline on RBI’s second debt buyback announcement

07 Dec 2012 Evaluate

Bond yields edged lower as the traders cheered the RBI's move to continue to buyback bonds via open market operations (OMO). The central bank will buy up to Rs 12,000 crore ($2.22 billion) of federal government bonds on December 11 through OMO.

On the global front, US benchmark Treasury yields dipped to near their lowest in three weeks on Thursday, supported by expectations the Federal Reserve will announce a new bond purchase program when it meets next week. Meanwhile, Oil prices fell on Thursday as the downside risk to the euro zone economic outlook reinforced worries about demand for petroleum, while uncertainty about budget negotiations in the United States continued to stoke investor caution.

The yields on the most?traded 8.33% - 2026 were trading 2 basis points lower at 8.24% from its previous close. The benchmark 10-year bond is in the shut period for trading.

The benchmark five-year interest rates were trading lower by 3 basis points at 7.08% against its previous close of 7.11%.

The Government of India have announced the sale (new/re-issue) of three dated securities for Rs 12,000 crore on December 07, 2012, which includes (i) “a new 8-Year Government Stock 2020” for a notified amount of Rs 4,000 crore (nominal) through yield based auction; (ii) “8.20 percent Government Stock 2025” for a notified amount of Rs 6,000 crore (nominal) through price based auction; and (iii) “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 December 07, 2012 (Friday).

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