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Bonds witness some respite on value buying, 10-Yr yield closes at 8.18%
Government securities
Sovereign bonds ended firm today on the back of some value buying and waning
supply of securities. The government will conduct its last auction (FY11) on Friday
for INR 100bn, however uncertainty persist over whether the government will
borrow another INR 100bn to compensate for the curtailed borrowing in
December. The benchmark 10 year bond closed 3 bps lower at 8.18% however the
8.13% 2022 bond had its gains capped due to the fresh supply in the 12 year
segment on Friday.
Swap rates also retraced marginally taking cues from the sovereign yields but still
continue to trade at elevated levels owing to the uncertainty about the policy rate
action from the central bank. Persistently high inflation data has pushed the swap
rates upwards by 25-30bps across maturities despite a significant improvement in
the liquidity over the fortnight.
Non-SLR market
Short term money market rates rose marginally today due to the muted demand
from fund houses owing to the limited inflow in their schemes. Three month CDs
were dealt at 9.75% while the one year CD traded in the 9.90%-10.00% range.
Punjab National Bank placed INR 4bn of one year CD at 9.95% and INR 5bn of
three month CD at 9.75%. It also raised INR 5.50bn of the four month segment at
9.75%. Bank of Baroda and Canara Bank placed INR 9.10bn and 5bn of one year
CD at 9.95%. Three month CPs was dealt in the 9.80%-10.05% range unchanged
from Monday’s level.
Money markets
Overnight rates closed firm above the central bank’s lending rates although banks
LAF dependence has reduced drastically over the fortnight due the improvement in
the system liquidity. Average LAF borrowing dropped to INR 680bn compared to
INR 1trn in the previous fortnight mainly on account of the government cash
balance in this fortnight.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Bonds witness some respite on value buying, 10-Yr yield closes at 8.18%
Government securities
Sovereign bonds ended firm today on the back of some value buying and waning
supply of securities. The government will conduct its last auction (FY11) on Friday
for INR 100bn, however uncertainty persist over whether the government will
borrow another INR 100bn to compensate for the curtailed borrowing in
December. The benchmark 10 year bond closed 3 bps lower at 8.18% however the
8.13% 2022 bond had its gains capped due to the fresh supply in the 12 year
segment on Friday.
Swap rates also retraced marginally taking cues from the sovereign yields but still
continue to trade at elevated levels owing to the uncertainty about the policy rate
action from the central bank. Persistently high inflation data has pushed the swap
rates upwards by 25-30bps across maturities despite a significant improvement in
the liquidity over the fortnight.
Non-SLR market
Short term money market rates rose marginally today due to the muted demand
from fund houses owing to the limited inflow in their schemes. Three month CDs
were dealt at 9.75% while the one year CD traded in the 9.90%-10.00% range.
Punjab National Bank placed INR 4bn of one year CD at 9.95% and INR 5bn of
three month CD at 9.75%. It also raised INR 5.50bn of the four month segment at
9.75%. Bank of Baroda and Canara Bank placed INR 9.10bn and 5bn of one year
CD at 9.95%. Three month CPs was dealt in the 9.80%-10.05% range unchanged
from Monday’s level.
Money markets
Overnight rates closed firm above the central bank’s lending rates although banks
LAF dependence has reduced drastically over the fortnight due the improvement in
the system liquidity. Average LAF borrowing dropped to INR 680bn compared to
INR 1trn in the previous fortnight mainly on account of the government cash
balance in this fortnight.
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