Home / Markets / Stock Markets /  Bond yields surge on report PMO not in favour of forex-denominated debt

The yield on government’s 10-year bond surged on Thursday after news reports said the Prime Minister’s Office (PMO) was opposed to the proposed sovereign bond sale in foreign currencies.

Soon after the news, the bond yield gained 8 basis points, the biggest since April, to hit a two-week high of 6.518% at 3.40 PM. The yield on 10-year government bond opened 6.439% and touched a low of 6.419% during the day so far, having closed at 6.434% on Wednesday.

News agency Cogencis on Thursday reported, citing an unnamed government official, that Prime Minister Narendra Modi’s office does not favor a forex-denominated overseas sovereign bond issuance. The report said the PMO favours rupee-denominated overseas sovereign bond issuances.

Analyst said this has led to confusion in the market on whether the government will go ahead with the proposed sale.

The market was also cautious following news that former finance secretary Subhash Chandra Garg has been transferred to the power ministry. Garg was responsible for overseeing the sale of sovereign bonds overseas.

Earlier Business Standard and Bloomberg reported that the government was considering an option to raise $10 billion in one go from its first overseas bond sale as early as October.

Meanwhile, the Indian rupee weakened against the US dollar to 69.02, down 0.06% from its previous close.

Bloomberg contributed to this story

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