Edelweiss, Bonds trade in a thin band, ten year yield at 8.00%

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Bonds trade in a thin band, ten year yield at 8.00%
Government securities
 Sovereign bonds traded in a thin band today with an upbeat underlying sentiment
owing to the lower than expected net borrowing announced in the Union Budget.
The government will borrowing INR 3.43trn during FY12 from the market on a net
basis as against an expectation of INR 3.80trn. This brings the gross borrowing
number to INR 4.17trn for the next fiscal. The benchmark ten year bond ended 1
basis lower at 8.00% while the 8.13% 2022 bond closed at 8.08%.
 RBI set a cut yield off yield for the ten year state development loan in the range of
8.46% - 8.48% for a quantum of INR 41.85bn.
Non-SLR market
 Banks mopped up INR 80bn through issuance of CDs. Canara Bank & Bank of India
placed INR 20bn & INR 13bn of three month CD at 10.12%. Bank of India also
raised INR 3bn of one year CD at 10.18%. Federal Bank placed INR 1.50bn of one
year CD at 10.25% while UBI placed INR 3.25 of one year CD at 10.21%. IDBI
Bank & CBI placed one year CD at 10.19%. Corporation Bank & Union Bank placed
INR 5bn of three month CD at 10.10%.
Money markets
 Overnight rates ended firm today as banks borrowed funds to meet their two day
reserve requirement at the start of the fortnightly reporting cycle. RBI injected INR
794bn through the LAF window compared to INR 803bn on Monday. Banks
preferred to borrow at the LAF window as call rates hovered in the 6.85%-6.95%
range through the day
 RBI set a cut off yield for the 91 day T-bill at 7.14%, flat from previous week,
while the cut off for the 182 day T-bill was set 2bps higher at 7.53%.