India Bond Yields Largely Unchanged, State Debt Sale Result Eyed

Tuesday,   24-Nov-2020   01:19 PM (IST)

Indian federal government bond yields remained little changed in the afternoon session, as traders awaited the outcome of a state debt auction, as well as the demand for a new 10-year bond that will be auctioned later this week. The benchmark 5.77% 2030 bond last changed hands at 99.08 rupees, yielding 5.90% at 1:00 p.m. in Mumbai, against 99.03 rupees, yielding 5.90% yesterday. The Indian rupee was at 74.01 to the dollar against 74.10 in the previous session. Indian states will raise at least 176.78 billion rupees through sale of five-year to 30-year bonds, the highest quantum on offer in the last six weeks. The central government will issue bonds worth at least 280 billion rupees on Friday, which includes 80 billion rupees of a new 10-year paper maturing in 2030. This paper will replace the existing benchmark note in the coming sessions. The federal government typically stops issuing a note once the outstanding paper reaches INR1.20 trillion and traders expect the new issue as the outstanding of the current benchmark 5.77% 2030 bond is at 1.23 trillion. The Reserve Bank of India will buy bonds worth 100 billion rupees via a special open market operation on Nov. 26, its third such auction in the last three weeks. It has already bought notes worth 871.32 billion through special OMOs and 400 billion rupees through outright OMO purchases in this financial year. New Delhi hiked its market borrowing to 13.10 trillion rupees for this fiscal year. The central bank has constantly assured the market that it would help absorb the record government borrowing. The benchmark Brent crude contract was 1.1% higher at $46.55 per barrel, extending yesterday’s 2.4% rise. India imports nearly 85% of its crude oil requirements.