Bond yields edge higher tracking rising crude oil prices

05 Jun 2013 Evaluate

Bond yields edged higher largely on the back of rising crude oil prices, while heavy selling on Tuesday by state-run banks, also pushed yields higher. However, the uptrend of the yields remain limited on central bank's OMO announcement this week and the government's plan to raise debt limits by another $5 billion.

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 inched lower in Asia on Wednesday, with investors focusing on Friday's jobs data for clues on whether the Federal Reserve could scale back its monetary stimulus in the coming months. Meanwhile, Brent futures held above $103 a barrel on Wednesday as demand growth hopes revived following data showing a surprise fall in crude stockpiles, with changes by South Korea on its freight charge rebates providing an additional boost.

Back home, the yields on 10-year 8.79% - 2021 bonds were trading 2 basis points (bps) up at 7.21% against its previous close of 7.19% on Tuesday.

The benchmark five-year interest rate swaps were trading unchanged at its previous close of 6.88% on Tuesday.

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.

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