BackIndian bonds drop as yields near two-week low deter buyers
The yield on the 8.83% notes due November 2023 rose two basis points to 8.69% as of 3.09pm
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Mumbai: India’s 10-year bonds fell as yields near a two-week low deterred buyers ahead of a weekly auction announcement and the new government’s first federal budget.
The yield on the 8.83% notes due November 2023 rose two basis points, or 0.02 percentage point, to 8.69% as of 3:09pm in Mumbai, according to the central bank’s trading system. The rate dropped eight basis points last week, ending at 8.66% on 4 July, little changed from a two-week low reached on 2 July.
The nation may auction about ₹ 15,000 crore ($2.5 billion) of bonds this week, an issuance calender on the Reserve Bank of India’s website shows before an announcement due on Monday.
Finance minister Arun Jaitley will keep the fiscal deficit target at 4.5% of gross domestic product in the 10 July budget, unchanged from what the previous administration estimated in February, according to the median forecast in a Bloomberg News survey.
“There’s some amount of profit-taking being seen before the budget," said Harish Agarwal, a fixed-income trader in Mumbai at FirstRand Ltd. “Buyers are in a wait-and-watch mode ahead of the auction and the key budget event. The expectations of new 10-year paper being issued soon has also weakened demand for the 2023 notes."
Prime Minister Narendra Modi will seek to borrow about ₹ 6 trillion rupees in the year through March 2015, little changed from the interim budget’s goal of ₹ 5.97 trillion rupees, the Bloomberg survey showed.
One-year interest-rate swaps, derivative contracts used to guard against swings in funding costs, rose two basis points to 8.36%, data compiled by Bloomberg show. Bloomberg
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