Mumbai: Indian federal bond yields were largely steady in thin trade on Wednesday, as the market awaited details of bonds the Reserve Bank of India (RBI) would buy back at its open market operation this week.
At 10:40am, the yield on the 8.24% bond maturing in 2018 was at 6.39%, little changed from its previous close of 6.38%.
Volume was a paltry Rs7.75 billion ($149 million) on the apex bank’s trading platform with the 2018 bond being most traded. Most investors were on the sidelines ahead of the buyback details announcement.
A trader at a primary dealership said the market was likely to rangebound until the RBI announces which bonds it would be buying back.
“Most market participants are expecting the central bank (RBI) to buy the 8.24% bond maturing in 2018, 7.95% bond maturing in 2032 and 8.33% bond maturing in 2036 as they are widely held,” he said.
The RBI is scheduled to buy back Rs60 billion of bonds, with an option to buy another Rs30 billion, on Thursday as it tries to ensure adequate demand for debt in the market amid heavy government borrowing.
The government is scheduled to sell Rs180 billion of debt this week, including Rs60 billion of treasury bills on Wednesday and Rs120 billion of government bonds on Friday.
The RBI will manage the government’s additional borrowing for 2008-09 fiscal year so it does not disrupt financial markets, the Reserve Bank of India deputy governor Shyamala Gopinath said on Tuesday.