MUMBAI: Indian federal bond yields ended slightly down on Friday, after lower-than-expected cut-off yields at a debt sale prompted some buying.
The 10-year benchmark bond yield ended one basis point down at 8.19 percent. It traded in a narrow 8.18-8.22 percent band during the session.
The RBI set a cut-off yield of 8.20 percent on the 2021 bonds, lower than a Reuters poll forecast of 8.23 percent. The 120-billion-rupee auction was fully sold.
"The cut-off was slightly aggressive on the 10-year bond, and that augured well for the market," said Prasanna Patankar, senior vice-president at STCI Primary Dealer.
Volume was low with total traded amount at 90.85 billion rupees ($1.84 billion) on the central bank's trading platform, sharply lower from 119.65 billion rupees on Wednesday and 186.40 billion rupees on Tuesday.
Post trading hours, the central bank said it bought 98.57 billion rupees of debt, as against 100 billion rupees notified via its open market operation in the secondary market. The RBI said it had bought 9.15 percent, 2024bonds at a cut-off yield of 8.28 percent, higher than 8.25 percent forecast in a Reuters poll.
"In this situation, when liquidity is such a big issue, traders could offload bonds through OMOs (open market operations) and it is encouraging that RBI has bought big chunk of the bonds offered," said a trader with a foreign bank.
Patankar of STCI expects the 10-year bond yield to be in a 8.10-8.25 percent band in the near term, with a cautious undertone likely next week. "Market will wait to see whether RBI will announce OMOs (open market operations) next week as well," Patankar said.
Since November, the RBI has bought about 906 billion rupees of debt through open market purchases. Indian treasury markets are shut on Monday because of a local holiday. The benchmark five-year swap rate was up 5 basis points at 7.32 percent, while the one-year rate settled 2 basis points up at 8.07 percent.
The 10-year benchmark bond yield ended one basis point down at 8.19 percent. It traded in a narrow 8.18-8.22 percent band during the session.
The RBI set a cut-off yield of 8.20 percent on the 2021 bonds, lower than a Reuters poll forecast of 8.23 percent. The 120-billion-rupee auction was fully sold.
"The cut-off was slightly aggressive on the 10-year bond, and that augured well for the market," said Prasanna Patankar, senior vice-president at STCI Primary Dealer.
Volume was low with total traded amount at 90.85 billion rupees ($1.84 billion) on the central bank's trading platform, sharply lower from 119.65 billion rupees on Wednesday and 186.40 billion rupees on Tuesday.
Post trading hours, the central bank said it bought 98.57 billion rupees of debt, as against 100 billion rupees notified via its open market operation in the secondary market. The RBI said it had bought 9.15 percent, 2024bonds at a cut-off yield of 8.28 percent, higher than 8.25 percent forecast in a Reuters poll.
"In this situation, when liquidity is such a big issue, traders could offload bonds through OMOs (open market operations) and it is encouraging that RBI has bought big chunk of the bonds offered," said a trader with a foreign bank.
Patankar of STCI expects the 10-year bond yield to be in a 8.10-8.25 percent band in the near term, with a cautious undertone likely next week. "Market will wait to see whether RBI will announce OMOs (open market operations) next week as well," Patankar said.
Since November, the RBI has bought about 906 billion rupees of debt through open market purchases. Indian treasury markets are shut on Monday because of a local holiday. The benchmark five-year swap rate was up 5 basis points at 7.32 percent, while the one-year rate settled 2 basis points up at 8.07 percent.
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