Bond yields nudge tad higher ahead of Rs 15,000 crore debt sale

Bond yields edged a bit higher as traders made room for Rs 15,000 crore debt sales, scheduled to be held later in the day. However, little caution was also witnessed ahead of the release of inflation data, due on August 14 next week, which would be next big factor to watch out after sluggish IIP data.

Putting up a pathetic show, India’s index of industrial production (IIP), a key measure of industrial output shockingly registered a negative growth of 1.8% in June 2012 at 168.3, from the same period in the past fiscal, as against the expectations of 1% and also lower than 2.4% growth figure for the month of May, which was later revised a tad to 2.5%.

On the global front, US 10-year Treasury bond yields came off 2-1/2-month highs on Friday after dismal trade data from China, sparked worries over the slowdown in the world's second-largest economy, which in turn strengthened the demand for safe heaven treasuries. Meanwhile, Brent crude slipped sub $113 a barrel on Friday as a sharp slowdown in China's trade flows heightened fuel demand worries; however, the losses remained limited on hopes of hopes world's second biggest economy easing monetary policy, which in turn would boost oil use.

The yields on 10-year benchmark 8.79% - 2021 rose 1 basis point at 8.15% from its previous close of 8.14% on Thursday.

The benchmark five-year interest rates were trading 3 basis points lower at 7% from its previous close of 7.03%.

The Government of India have announced the sale (re-issue) of  four dated securities for Rs 15,000 crore on August 10, 2012, including (i) “8.07% Government Stock 2017-JUL” for a notified amount of  Rs 4,000 crore (nominal) through price  based auction;  (ii) “8.15% Government Stock 2022” for a notified amount of  Rs 6,000 crore (nominal) through price based auction;  (iii) “8.97% Government Stock 2030” for a notified amount of  Rs 3,000 crore (nominal) through price based auction; and (iv) “8.33% Government Stock 2036” for a notified amount of  Rs 2,000 crore (nominal) through price based auction. The auctions to be conducted using uniform price method will be held on August 10, 2012 (Friday).