Bond yields tread water ahead of Rs 14,000 crore debt sale

Bond yields were treading water on Friday as traders waited on the sidelines ahead of Rs 14,000 crore debt sale, scheduled to take place later in the noon. The yields also witnessed some consolidation after hitting three-week low as RBI allowed foreign institutional investors (FIIs) to buy $5 billion more in government bonds, while keeping the overall limit intact, a move which is expected to re-price 3-5 year bonds, preferred by FIIs.

On the global front, U.S. Treasury debt prices fell on Thursday after data showed jobless claims in the world's largest economy dropped to their lowest in more than eight years, although losses may be limited by safe-haven buying given tensions in the Middle East and Ukraine. Meanwhile, Brent crude held steady above $107 a barrel on Friday, on track to end the week flat as tensions in oil producing regions supported prices against weak demand and plentiful supplies.

Back home, the yields on new 10 year Government Stock 2023 was trading steady at its Thursday’s close of 8.65% on Friday

The benchmark five-year interest rate swaps were trading 1 basis point higher at 7.88% from its previous close of 7.87% on Thursday.

The Government of India announce the sale of four dated securities for Rs 14,000 crore on July 25, 2014, including (i) 8.27% Government Stock 2020 for a notified amount of Rs 2,000 crore, (ii) New 10-year Government Stock for a notified amount of Rs 7000 crore, (iii) 8.32% Government Stock 2032 for a notified amount of Rs 2000 crore and lastly (iv) 8.30% Government Stock 2042 for a notified amount of Rs 3000 crore respectively.