Yields remain steady amidst thin volumes ahead of the year end -Edelweiss,

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Yields remain steady amidst thin volumes ahead of the year end
Government securities
 Sovereign bonds traded in a narrow range, amidst thin volumes, as participants
avoided taking any big positions towards the end of the financial year. Volumes on
the central bank’s trading platform were at INR38bn compared to INR 62bn on
Tuesday. Banks typically avoid big transaction in the run up to the year-end as
such transaction may alter the liquidity and capital position of the bank. Fresh
supply of sovereign bonds in the next week prompted some traders to trim their
holdings. The most actively traded 8.13% 2022 bond closed 3bps higher at 8.07%
while the benchmark ten year bond closed at 8.01%.
Non-SLR market
 Issuance of CDs slipped as most banks slowed down after mopping up huge
amounts in the last few weeks to meet their year-end deposit base target. In
March, banks have raised INR 780bn through CD issuance in order roll over their
maturing CDs & increase their deposit base. Three month CDs were quoted at
9.55%-9.60% while one year CDs were quoted at 9.65%-9.75%
 Bank of India & PNB placed INR 5bn & INR 4bn respectively of three month CD at
9.55% while State Bank of Mysore placed INR 2bn of three month CD at 9.55%.
UCO Bank & Bank of Maharashtra placed INR 20bn & INR 5bn of three month CD
at 9.65%.
Money markets
 Overnight rates remained steady above the central bank’s repo lending rate. Banks
borrowed INR 869bn from the LAF window compared to INR 909bn on Tuesday.