Indian bonds drop after yield at this month’s low deters buyers
The yield on the 8.4% notes due July 2024 rose three basis points, or 0.03 percentage point, to 8.51%
Mumbai: India’s 10-year sovereign bonds fell on Thursday on speculation a drop in the yield on Wednesday to the lowest level this month deterred buyers.
The yield on the 8.4% notes due July 2024 rose three basis points, or 0.03 percentage point, to 8.51% in Mumbai, according to the central bank’s trading system. The rate dropped five basis points, or 0.05 percentage point, on Wednesday to the lowest level since 28 July.
JPMorgan Chase and Co. bought about $2.4 billion of Indian government bonds on Wednesday, leading record purchases by foreign banks, according to three fixed-income dealers in Mumbai. Federal Reserve officials raised the possibility they might increase US interest rates sooner than anticipated, according to minutes of their July meeting released on Wednesday.
“We are seeing some consolidation after a good rally," said Vijay Sharma, executive vice president for fixed income at PNB Gilts Ltd in New Delhi. “I wouldn’t attribute much of today’s move to the Fed as nobody expects the US to not raise interest rates and markets have more or less discounted that."
India plans to sell ₹ 12,000 crore of bonds maturing between 2020 and 2042 at a weekly auction on Friday. The nation will also offer ₹ 3,208 crore of debt limits to foreign institutional investors on Friday to enable them to buy government bonds.
One-year interest-rate swaps, derivative contracts used to guard against swings in funding costs, fell one basis point to 8.47%, data compiled by Bloomberg show. Bloomberg
Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!