Bond yields ease on RBI’s OMO announcement

04 Jun 2013 Evaluate

Bond yields eased as buying was witnessed post Reserve Bank of India announced Open Market Operations on Monday evening. While, drop in the prices of Brent crude also weighed on the sentiment of bond yields.

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 (OMOs) by purchasing the government securities for an aggregate amount of Rs 7,000 crore on June 7, 2013 through multi-security auction using the multiple price method.

On the global front, US 10-year Treasuries held steady in Asia on Tuesday, stabilizing after seeing choppy moves the previous day due to weak US manufacturing data and staying cautious ahead of jobs data later in the week. Meanwhile, Brent crude futures slipped below $102 a barrel on Tuesday as weak US manufacturing data stoked worries about demand growth in the world's biggest oil consumer.

Back home, the yields on 10-year 8.79% - 2021 bonds were trading 3 basis points (bps) lower at 7.21% against its previous close of 7.24% on Monday.

The benchmark five-year interest rate swaps were trading 4 basis points lower at 6.92% from its previous close of 6.96% on Monday.

The Government of India have announced the sale (re-issue) of four dated securities for Rs 14,000 crore on June 7, 2013 (i) “8.12 percent Government Stock 2020” for a notified amount of Rs 3,000 crore (nominal) through price based auction; (ii) “8.33 percent Government Stock 2026” for a notified amount of Rs 6,000 crore (nominal) through price based auction; (iii) “8.32 percent Government Stock 2032” for a notified amount of Rs 2,000 crore (nominal) through price based auction, and (iv) “8.30 percent Government Stock 2042” for a notified amount of Rs 3,000 crore (nominal) through price based auction. The auctions will be conducted using multiple price method. The auctions will be conducted by the Reserve Bank of India, Fort, Mumbai on June 7, 2013 (Friday).

The Reserve Bank of India has announced the auction of 182 and 91-days 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 June 5, 2013 using 'Multiple Price Auction' method.

The Government of India have announced the sale “New Inflation Indexed Government Stock-2023” for a notified amount of Rs 1,000 crore through yield based auction on June 4, 2013. The auction will be conducted using uniform price method.

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