India Bond Yields Steady; State Debt Auction Outcome Eyed

Tuesday,   17-Nov-2020   01:20 PM (IST)

Indian federal government bond yields were largely unchanged in afternoon trade, as investors awaited the cutoffs at today’s state debt sale. The benchmark 5.77% bond maturing in 2030 changed hands at 99.26 rupees, yielding 5.87% at 1:00 p.m. in Mumbai, against 99.19 rupees, yielding 5.88%, on Friday. The Indian rupee was at 74.59 to the dollar against 74.60 on Friday. Indian states are selling 87.16 billion rupees of bonds maturing in 10-to-20 years today. The Reserve Bank of India will likely set cutoff yields on 10-year state bonds between 6.49% and 6.55%, according to the median in a NewsRise poll. India's economy entered a recession for the first time in its history in the first half of this fiscal, but could see a rebound in the current quarter if the ongoing revival in activities persists, economists at the central bank said last week. The central bank expects the economy to shrink by 9.5% in this fiscal year that ends Mar. 31. Asia’s third-largest economy contracted by a record 23.9% in April-June, the period that saw one of the most stringent lockdowns to curb the spread of the coronavirus. India is the worst pandemic-hit country after the U.S., with the number of reported cases rising to 8.87 million, including 130,519 fatalities. However, daily fresh caseloads have eased since mid-September. Finance Minister Nirmala Sitharaman last week said that New Delhi’s latest measures to support the rebound will not impact its record high market borrowing. Over the weekend, U.S. drugmaker Moderna announced promising trial data of its coronavirus vaccine with a 94.5% efficacy rate. However, bond markets across the globe remained muted about the news as a similar announcement was made last week by U.S. drugmaker Pfizer and its German partner BioNTech, claiming their vaccine was more than 90% effective in curing the virus. The vaccine candidates have yet to get emergency approvals. The benchmark Brent crude oil contract was trading 0.6% higher at $44.08 per barrel. India imports nearly 85% of its crude oil requirements. India imports nearly 85% of its crude oil requirements.