Mumbai: Bond yields fell on Monday on speculation borrowing for the 2009-10 fiscal year could be lower than expected after the government did not announce a bond auction for later this week.
At 10:20 am, the yield on the most traded 6.07% 2014 bond was at 6.45%, below Friday’s closing of 6.50%. There were no deals yet on the benchmark 10-year bond.
Volumes were a moderate Rs31.15 billion ($647.6 million) on the Reserve Bank of India’s trading platform.
According to the tentative borrowing calendar, the government is due to sell Rs80 billion of bonds between 3-10 July but no announcement has been made yet.
The government has raised its auction sizes for six straight weeks by 25% each, raising expectations that it would increase planned record gross market borrowing of Rs3.62 trillion in its final budget for 2009-10 due on 6 July.
But traders said the absence of an auction announcement on Monday lifted speculation that there will be no offering, which has invariably been on a Friday in the past weeks, this week.
“No auction announcement yet is positive,” said Kamlesh Chand, a fixed income dealer at IndusInd Bank.
The dealer said it sees the 2014 bond to trade in the range of 6.40-6.50% during the day.
The government will auction Rs20 billion of 91-day treasury bills and Rs10 billion of 364-day treasury bills on Wednesday.
Helping push yields lower, oil fell towards $68 a barrel on Monday as the easing of tensions in energy-rich Nigeria prompted some investors to take profit
US Treasuries rose on Friday, pushing benchmark yields to their lowest in nearly four weeks as signs of subdued inflation allowed bonds to bask in the glow of well-received debt auctions this week.