Bond yields edge lower on Friday ahead of the release of borrowing schedule

Bond yields were edging lower on Friday ahead of the borrowing schedule and the Rs 12,000 crore debt sale later in the session. Nevertheless, the yields also edged lower after bonds buyback result disappointed the street, with the government buying back Rs 6044 crore of bonds against the initial target of Rs 8000 crore. Additionally, traders also preferred being on the sidelines ahead of the monetary policy review due on September 30 on speculation that the Reserve Bank of India will lower the held-to-maturity (HTM) amount for bonds.

Meanwhile, reports suggest that the government is scheduled to borrow Rs 2.32 trillion ($37.94 billion) through bonds in this period, excluding Rs 160 billion that was not auctioned in the April-September period, which could be added to the scheduled  amount.

On the global front, U.S. 30-year treasury yield on Thursday appeared on track to post biggest one-day decline since late May. Meanwhile, brent crude held above $97 a barrel on Friday, set for its third weekly fall in four, as hefty supplies capped price gains and outweighed concerns that rising tensions in the Middle East could disrupt supply

Back home, the yields on new benchmark 8.40%- 2024 bonds were 2 basis points lower at 8.47% from its previous close of 8.49% on Thursday.

The benchmark five-year interest rate swaps were trading 2 basis points lower at 7.83% from its previous close of 7.85% on Thursday.

The Government of India have announce the sale of Four dated securities for Rs 12,000 crore on September 26, 2014, including (i) 8.27% Government Stock 2020 for a notified amount of Rs 2,000 crore, (ii) 8.60% Government Stock 2028 for a notified amount of Rs 6,000 crore, (iii) 9.20% Government Stock 2030 for a notified amount of Rs 2,000 crore and lastly (iv) 8.30% Government Stock 2042 for a notified amount of Rs 2,000 crore.