Bond yields edge lower on strong demand in state loan auction

Bond yields edged lower on strong demand at the state loan sale, however caution ahead of Rs 16,000 crore debt sale on Friday limited the further slide of the yields. In State loan auction, while a total debt worth Rs 8416 crore was offered by eleven state government, Rs 8916 crore was subscribed, with government of Andhra Pradesh retaining 500 crore over the notified amount.

On the global front, U.S. Treasuries yields were little changed on Monday after anticipation of another round of strong U.S. economic data restricted safe-haven bids, and as traders discounted conflict in Ukraine and emphasized efforts to ease tensions in the country. Meanwhile, Brent futures held near a six-week high of more than $110 a barrel on Tuesday on worries a pact to calm tensions in Ukraine was faltering, although expectations of a gain in U.S. crude stockpiles weighed on prices.

Back home, the yields on new 10 year Government Stock 2023 were trading 3 basis points lower at 8.83% from its previous close of 8.86% on Monday.

The benchmark five-year interest rate swaps were trading 1 basis point higher at 8.44% from its previous close of 8.43% on Monday.

The Reserve Bank of India has announced the auction of 91 and 182-days Government of India Treasury Bills for notified amount of Rs 9,000 crore and Rs 6,000 crore respectively. The auction will be conducted on April 23, 2013 using 'Multiple Price Auction' method.

The Government of India announce the sale of Four dated securities for Rs 16,000 crore on April 25, 2014, which include (i) 7.80% Government Stock 2020 for a notified amount of Rs 4,000, (ii) 8.83% Government Stock 2023 for a notified amount of Rs 7,000 and (iii) 8.32% Government Stock 2032 for a notified amount of Rs 2,000 and (iv) lastly, (iv) 8.30% Government Stock 2042 for a notified amount of Rs 3000 crore.

The auctions will be conducted using uniform price method. Up to 5% of the notified amount of the sale of the stocks will be allotted to eligible individuals and Institutions as per the Scheme for Non-Competitive Bidding Facility in the Auction of Government Securities.