Mumbai: Indian overnight indexed swap rates inched up on Wednesday as bond yields rallied over 70 basis points after the government announced its additional borrowing plan to fund its fiscal stimulus package late on Tuesday.
At 4:42pm, the benchmark five-year swap rate was at 5.12/5.22% compared with 4.72/4.82% at close on Tuesday.
The 10-year bond yield was at 6.07%, which was its highest since mid-December 2008.
“Swaps simply followed the bond yields, which rose on an unexpected borrowing plan by the government,” said a dealer with a private bank.
After market hours on Tuesday the RBI said the government will borrow a higher-than-expected Rs500 billion in bonds between 5 January and 31 March.
According to RBI’s platform, volumes were a low Rs5 billion with more deals seen in the 5-year segment.