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Bonds close the week on a firm note; 10 Yr bond closes at 8.13%.
Government securities
Bonds ended the week on a firm note on the back of the softer than expected
action taken by the central bank to rein in the soaring inflation. RBI raised its key
rates by only 25bps at its policy review on Tuesday despite the persistently high
inflation. With only two more sovereign auction pending in the current fiscal (of
INR 100bn each), the supply is also relatively lower. The 7.80% 2020 bond and
the 8.13% 2022 bond both closed 1bps lower at 8.13% and 8.16% respectively.
In the run up to the policy review, swap rates had risen 10-15bps across
maturities due to an anticipation that the central bank may hike rates by as much
as 50bps. However the due the softer action taken by the central bank swap rates
have receded from the elevated levels. The one year swap closed the week 10bps
lower at 7.36% while the longer maturity five year swap closed at 7.95%, down
11bps compared to Monday’s close.
Non-SLR market
CD issuance remained muted as investors preferred to hold on to cash, on
expectation of a rise in the short term rates in the coming week. Union Bank and
Axis Bank placed INR 5bn and INR 2bn of one year CD at 9.85% and 9.93%
respectively. SBBJ placed INR 2bn of six month CD at 9.74% while Karnataka
Bank placed INR 1bn of March maturity CD at 8.15%.
Money markets
Banks demand for funds faded out due to the end of the reporting cycle reflective
in their borrowing at the LAF which dropped to INR 836bn compared to over INR
1trn in the first week of the reporting cycle. Overnight rates will continue to
remain firm above the central bank’s lending rate, unless the government starts
depleting its whopping INR 1.53trn cash balance in an accelerated manner in
February. Call rates ended the week at 6.68% while the CBLO rates closed at
5.78% due to the lack of demand for funds.
India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details �� ��
Bonds close the week on a firm note; 10 Yr bond closes at 8.13%.
Government securities
Bonds ended the week on a firm note on the back of the softer than expected
action taken by the central bank to rein in the soaring inflation. RBI raised its key
rates by only 25bps at its policy review on Tuesday despite the persistently high
inflation. With only two more sovereign auction pending in the current fiscal (of
INR 100bn each), the supply is also relatively lower. The 7.80% 2020 bond and
the 8.13% 2022 bond both closed 1bps lower at 8.13% and 8.16% respectively.
In the run up to the policy review, swap rates had risen 10-15bps across
maturities due to an anticipation that the central bank may hike rates by as much
as 50bps. However the due the softer action taken by the central bank swap rates
have receded from the elevated levels. The one year swap closed the week 10bps
lower at 7.36% while the longer maturity five year swap closed at 7.95%, down
11bps compared to Monday’s close.
Non-SLR market
CD issuance remained muted as investors preferred to hold on to cash, on
expectation of a rise in the short term rates in the coming week. Union Bank and
Axis Bank placed INR 5bn and INR 2bn of one year CD at 9.85% and 9.93%
respectively. SBBJ placed INR 2bn of six month CD at 9.74% while Karnataka
Bank placed INR 1bn of March maturity CD at 8.15%.
Money markets
Banks demand for funds faded out due to the end of the reporting cycle reflective
in their borrowing at the LAF which dropped to INR 836bn compared to over INR
1trn in the first week of the reporting cycle. Overnight rates will continue to
remain firm above the central bank’s lending rate, unless the government starts
depleting its whopping INR 1.53trn cash balance in an accelerated manner in
February. Call rates ended the week at 6.68% while the CBLO rates closed at
5.78% due to the lack of demand for funds.
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