Mumbai: Indian bonds fell for the first time in four days on Tuesday, on speculation investors will demand higher yields as government debt sales increase.
Yields on notes maturing in 2018 climbed from a two-week low before a planned sale of Rs12,000 crore of bonds by the government on 6 March.
The government last month raised its debt-sale target for the fiscal year ending 31 March by 80% to Rs2.61 trillion, to fund additional expenditure aimed at countering an economic slowdown.
“Yields rose today (Tuesday) because of concerns about increasing debt supply,” said Baljinder Singh, a fixed-income trader at state-owned Andhra Bank in Mumbai.
“People who bought bonds in recent days are selling ahead of the auction later this week,” he added.
The yield on the most-traded 8.24% note due April 2018 rose nine basis points to 6.38% at the 5.30pm close in Mumbai, according to the Reserve Bank of India’s trading system. The price fell 0.65 paisa per Rs100 face amount to Rs112.70.
The benchmark yield has climbed 1.52 percentage points from a record low of 4.85% reached in January.
The government will sell Rs8,000 crore of the 6.05% debt due in 2019, and Rs2,000 crore each of the 8.24% securities maturing in 2027 and 6.83% notes due in 2039, according to the finance ministry.
The government plans a record Rs3.62 trillion in bond sales in the fiscal year starting 1 April.