India’s 10-year bond hits one-year high; borrowing calendar awaited
The 10-year benchmark bond yield ended down 1 basis point at 8.44%, after earlier dropping to 8.42%, its lowest since 13 September 2013
Mumbai: India’s benchmark 10-year bond gained on Monday, sending the yield to its lowest in nearly a year, on hopes the government would cut its borrowing programme for the second half of this fiscal year ending March 2015.
Finance minister and Reserve Bank of India (RBI) officials are due to meet on Friday to decide how much the government would need to borrow from the markets in the second half. The government is due to borrow ₹ 2.32 trillion in the second half of the fiscal year, according to its budget, although that could increase to ₹ 2.48 trillion to include the ₹ 16,000 crore cut in the first half of the year.
Hopes of a cut gathered more steam after finance secretary Arvind Mayaram was quoted by a local newspaper as saying borrowing could be cut depending on economic growth, although he noted it was too early to make a final decision. “We expect the government will await more clarity on disinvestment, oil prices and tax collections before it goes ahead with any cut in its market borrowings," said Soumyajit Niyogi, analyst, interest rate and equity at SBI DFHI Ltd, a primary dealership in Mumbai.
The 10-year benchmark bond yield ended down 1 basis point at 8.44%, after earlier dropping to 8.42%, its lowest since 13 September 2013. Bonds pared some of their gains, tracking lower emerging market assets ahead of the preliminary reading of a private survey of manufacturing in China due on Tuesday.
Meanwhile, sentiment is expected to turn more cautious ahead of the RBI’s policy review on 30 September. In the overnight indexed swap market, the benchmark five-year swap rate closed down 7 bps at 7.80%, while the one-year rate fell 2 bps to 8.40%. Reuters
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