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Bond yields edge higher as dealers offload Friday’s auction papers

22 Jul 2013 Evaluate

Bond yields edged higher after dealers offloaded auction papers, which they underwrote at Friday’s auction. Further, fears of more liquidity tightening steps from the central bank, also weighed on the sentiment.

The Government of India announced the sale (re-issue) of four dated securities for Rs 15,000 crore on July 19, 2013 (i) ‘7.28 percent Government Stock 2019’ for a notified amount of Rs 3,000 crore (nominal) through price based auction; (ii) ‘7.16 percent Government Stock 2023’ for a notified amount of Rs 6,000 crore (nominal) through price based auction;(iii) ‘8.28 percent Government Stock 2032’ for a notified amount of Rs 3,000 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.

On the global front, US Treasuries prices rose on Friday as disappointing earnings from technology giants Google and Microsoft weighed on stocks and rekindled safe-haven bids for bonds, pushing benchmark yields to two-week lows. Meanwhile, US oil continued to trade above Brent futures on Monday after flipping to a premium for the first time since 2010 in the previous session, while both benchmarks held firmly above $108 a barrel amid hopes of a revival in global demand growth.

Back home, the yields on 10-year 7.16% - 2023 bonds were trading 2 basis points higher at 7.96% from its previous close of 7.94% on Friday.

The benchmark five-year interest rate swaps were trading flat at its previous close of 8.02%.

Meanwhile, the Reserve Bank of India has announced the auction of 364 and 91-days Government of India Treasury Bills for notified amount of Rs 5,000 crore and Rs 7000 crore respectively. The auction will be conducted on July 24, 2013 using 'Multiple Price Auction' method.

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