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Bonds continue rally on lack of supply; ten year closes at 8.07%
Government securities
Sovereign bonds traded firm today on anticipation that GoI will not conduct
another auction to compensate for the trimmed borrowing owing to sufficiently
large cash balance as well as the strained system liquidity. GoI cash balance with
RBI stood at INR 437bn as on 11th Feb compared to INR 270bn the week before.
Yields edged lower across maturities with healthy volumes of INR 100bn on the
central bank’s trading platform. The most liquid 8.13% 2022 bond closed 5bps
lower at 8.10% while the ten year benchmark bond closed 3bps lower at 8.07%.
Swap rates remained firm despite a fall in sovereign yields on concerns over the
central bank’s stance towards inflation at its policy review on 17th March.
Non-SLR market
Short term money market rates continued to edge higher despite the correction in
the longer end of the curve. Three month CDs were dealt at 10.00% level owing to
the strong demand from bank to roll over their maturing instruments. INR 630bn
of CDs are maturing until Mar-11 and banks will have to roll over at higher cost
given the relatively slow deposit mobilization and tight liquidity situation.
Andhra Bank placed INR 5bn of three month CD at 10.01% and INR 2.50bn of one
year CD at 10.10%. Axis Bank raised INR 750mn of one year CD at 10.20%. Bank
of Maharashtra raised INR 1bn of 7th Apr maturity CD at 9.95%.
Money markets
LAF borrowing dropped to INR 862bn today compared to INR 1trn in the previous
week mainly on account of the coupon inflows amounting to INR 100bn over the
weekend. Redemption of INR 176bn (6.57%GoI 2011) on 24th Feb will help ease
the liquidity further. Call rates closed marginally lower at 6.78% while the CBLO
rates closed below the central bank’s lending rate.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Bonds continue rally on lack of supply; ten year closes at 8.07%
Government securities
Sovereign bonds traded firm today on anticipation that GoI will not conduct
another auction to compensate for the trimmed borrowing owing to sufficiently
large cash balance as well as the strained system liquidity. GoI cash balance with
RBI stood at INR 437bn as on 11th Feb compared to INR 270bn the week before.
Yields edged lower across maturities with healthy volumes of INR 100bn on the
central bank’s trading platform. The most liquid 8.13% 2022 bond closed 5bps
lower at 8.10% while the ten year benchmark bond closed 3bps lower at 8.07%.
Swap rates remained firm despite a fall in sovereign yields on concerns over the
central bank’s stance towards inflation at its policy review on 17th March.
Non-SLR market
Short term money market rates continued to edge higher despite the correction in
the longer end of the curve. Three month CDs were dealt at 10.00% level owing to
the strong demand from bank to roll over their maturing instruments. INR 630bn
of CDs are maturing until Mar-11 and banks will have to roll over at higher cost
given the relatively slow deposit mobilization and tight liquidity situation.
Andhra Bank placed INR 5bn of three month CD at 10.01% and INR 2.50bn of one
year CD at 10.10%. Axis Bank raised INR 750mn of one year CD at 10.20%. Bank
of Maharashtra raised INR 1bn of 7th Apr maturity CD at 9.95%.
Money markets
LAF borrowing dropped to INR 862bn today compared to INR 1trn in the previous
week mainly on account of the coupon inflows amounting to INR 100bn over the
weekend. Redemption of INR 176bn (6.57%GoI 2011) on 24th Feb will help ease
the liquidity further. Call rates closed marginally lower at 6.78% while the CBLO
rates closed below the central bank’s lending rate.
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