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Bonds trade in a narrow range; benchmark closes at 8.11%
Government securities
Sovereign bonds traded in a narrow range today, with a downward bias, on
concerns over a likely increase in fuel prices may stroke inflationary pressures.
Volumes on the central bank’s trading platform dried up to INR 40bn compared to
INR 100bn on Tuesday. The benchmark ten year bond closed 1 basis higher at
8.11% while the 7.17% 2015 bond closed unchanged at 8.03%.
Non-SLR market
CD issuance amounted to INR 40bn today. Corporation Bank placed INR 4.75bn in
one year CD at 9.25% and INR 5 bn in three month CD at 8.97%. Syndicate Bank
placed INR 2.15bn in one year CD at 9.25% and INR 3bn in three month CD at
8.99%. Exim Bank also issued six month CP amounting to INR 3bn at 8.80%.
Money markets
Amidst the tight liquidity, the cut off for the T-Bill auction also soared higher for
GoI. The 91 day T-Bill cut off came in at 7.22% compared to 6.94% last week
while the 182 day T-Bill cut off inched 6 bps higher at 7.29%.
Call rates continued firm at the 6.67% level with central banks injecting INR
1.27trn through the repo window.
Swaps
Swap rates receded marginally on hopes that the downsized auction and OMOs will
ease liquidity in the near term. One year and five year swaps closed 1 basis lower
at 6.94% and 7.47% respectively.
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