Systemic liquidity concerns persist; 10-year benchmark closes at 8.03%:: Edelweiss

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Systemic liquidity concerns persist; ten year benchmark closes at 8.03%
Government securities
 Sovereign bond yields were higher by around 3-4bps today as concerns over tight
liquidity induced traders to take profit on positions. The benchmark 10 Yr bond
closed 4 basis points higher at 8.03% with the total volumes on the central banks
trading platform at INR 5bn level. The 8.13 GOI 2022 bond closed at 8.07% and
the 7.99 GOI 2017 bond closed at 7.96%.


Non-SLR market
 Central Bank placed 500cr of 90 day CD at 8.25%, State Bank of Bikaner and
Jaipur placed 400cr 8 month CD at 8.78%, OBC placed 250cr of 45 day CD at
8.10% and Union Bank placed 185cr of 1yr CD at 8.83%.

Money markets
 Call rates closed higher at 6.92%, staying above the RBI’s repo rate of 6.25%
signaling both tight liquidity and bank borrowing to meet reserve requirements.
CBLO rates closed lower at 6.26%. Banks borrowed INR 1.38tn via the repo
auction.

Swaps
 The swap rate curve flattened a further 3bps as the longer tenures remained flat
while traders paid the shorter tenures on the tight liquidity situation. One year
swap closed 4 bps higher at 6.77% while the five year swap closed 1bp higher at
7.22%