Bonds fall ahead of govt debt auction this week

Bonds fall ahead of govt debt auction this week

Mumbai: India’s bonds fell after the government said it will sell more debt than it previously planned at an auction this week.

The yield on the benchmark 10-year note rose from near a one-month low before the sale of Rs12,000 crore of bonds on 25 September, Rs4,000 crore more than planned. India plans to borrow a record Rs4.51 trillion from the bond market in this fiscal.

Investors were probably not anticipating the increased supply, which has caused some realignment of yields upwards, said Roy Paul, assistant manager of treasury at Federal Bank Ltd in Mumbai.

The yield on the 6.90% note due July 2019 rose three basis points to 7.12% at close in Mumbai, according to the central bank’s trading system. The price fell 0.22, or 22 paise per Rs100 face amount, to 98.43.

The government will offer Rs6,000 crore of notes due 2017, Rs4,000 crore of debt maturing in 2020 and Rs2,000 crore of bonds due in 2032 at this week’s auction, the Reserve Bank of India said in a statement.

The central bank, which manages government debt sales, rejected bids at a bond auction on 7 August, without providing details. It had planned to raise Rs12,000 crore.