Bond yields traded higher on Wednesday, after India Ratings and Research (Ind-Ra) in its latest report has revised upwards its outlook on the microfinance sector to 'neutral' from 'negative' for the next financial year (FY23), on the back of a revival in growth that could clip at 30 per cent. It expects the sector to grow 20-30 per cent in both FY22 and FY23 in comparison to the below 10 per cent AUM (assets under management) growth in the previous two years. Given the yield limitations, mid- and small-MFIs have not seen comparable growth.
In the global market, yields on U.S. Treasuries edged higher on Tuesday as U.S. President Joe Biden announced new sanctions on Russia in retaliation for Moscow recognizing two breakaway regions of Ukraine, but the bond market reaction was muted overall. Furthermore, oil prices took a breather after surging to seven-year highs in the previous session as it became clear the first wave of U.S. and European sanctions on Russia for sending troops into eastern Ukraine would not disrupt oil supply.
Back home, the yields on new 10 year Government Stock were trading 1 basis point higher at 6.75% from its previous close of 6.74% on Tuesday.
The benchmark five-year interest rates were trading 1 basis point higher at 6.00% from its previous close of 5.99% on Tuesday.