India Bond Yields Higher As Government Hikes Borrowing Aim

Friday,   16-Oct-2020   01:20 PM (IST)

Indian sovereign bond yields remained higher in the afternoon session, as the government hiked its market borrowing and traders awaited the results of the weekly debt auction. The benchmark 5.77% bond maturing in 2030 changed hands at 98.94 rupees, yielding 5.91%, at 1:00 p.m. in Mumbai against 99.05 rupees, yielding 5.90%, yesterday. The Indian rupee was at 73.30 to the dollar against 73.38 yesterday. The government is selling 280 billion rupees of bonds today. New Delhi hiked its market borrowing by 1.1 trillion rupees to a record 13.1 trillion rupees for the full-year, as it operationalized the special window to bridge the goods and services tax shortfall for Indian states. The government will channel the funds to states as loans in lieu of GST compensation cess and the borrowing won’t impact the federal fiscal deficit, the government has said. The government's weekly bond auctions will go on until Mar. 12, with the quantum varying between 170 billion rupees and 310 billion rupees. The Reserve Bank of India today announced an open market purchase of state bonds worth up to 100 billion rupees on Oct. 22, which will be the first ever such operation. The RBI, in an attempt to cap yields, has hiked the quantum of outright bond purchases and special OMOs and has extended banks’ increased held-to-maturity limit by one year. The benchmark Brent crude oil contract was trading 1% lower at $42.70 per barrel. India imports nearly 85% of its crude oil requirements.