Mumbai: Bond yields rose on Wednesday as investors waited for details of the government’s borrowing plan for the first part of the fiscal year starting April and an auction of Rs120 billion ($2.4 billion) of bonds.
The benchmark 2019 bond yield ended at 6.77%, higher than Tuesday’s close of 6.71%, taking its rise this week to 25 points. Volume was a low Rs36.65 billion on the Reserve Bank of India’s (RBI’s) trading platform.
The RBI bought back Rs100.35 billion through an auction, just above the Rs100 billion it had offered to purchase, a day ahead of an auction to sell Rs120 billion of government securities.
“There’s continuous anticipation that supply could be strong in bonds,” Harihar Krishnamoorthy, treasurer at Development Credit Bank, said.
The government plans to borrow a record Rs3.62 trillion in 2009-10. Authorities normally release a borrowing calendar for six months, but Tuesday economic affairs secretary Ashok Chawla said the plan to be released this week may cover a shorter time period.
Traders were also hoping for a possible announcement about RBI steps to cushion impact of the heavy borrowing.
Chawla said on Tuesday that a private placement of government bonds with the central bank (RBI) to raise funds to meet the government’s borrowing needs was an option.