Bond rates fall ahead of $2 bn debt auction

Bond rates fall ahead of $2 bn debt auction

Mumbai: Indian bonds fell on speculation investors sold securities to free up cash for a debt auction.

The benchmark 2019 note fell as the government prepared to sell Rs100 billion ($2 billion) of bonds on Friday as part of its annual borrowing plan. India plans record debt sales for the fiscal year ending 31 March to fund stimulus packages and bolster the economy.

The yield on the 6.05% note due February 2019 rose three basis points to 6.47% at close in Mumbai, according to the central bank’s trading system.

The price fell 0.18, or 18 paise per 100-face amount to 97. A basis point is 0.01 percentage point.

The government has offered to sell Rs60 billion ($1.2 billion) of the 2019 bonds and Rs40 billion of the 6.72% bonds maturing in 2014. It has raised its borrowing target for the year ending 31 March by 80% to Rs2.61 trillion.

In another development, four traders said that India’s federal bond trading platform had shut down temporarily ldue to a techincal snag.

“The platform is up and running from our end but there are some connectivity issues," said Ravi Rajan, an executive vice-president at Clearing Corporation of India, the clearing house, which runs the platform on behalf of the central bank.