India’s 10-year bonds gained for a ninth day, the longest winning run since November 2009, after the government deferred a debt auction previously scheduled for this week.
The finance ministry will seek to raise 120 billion rupees ($2.2 billion) in February instead of this week, the central bank said in a statement on Dec. 31. The Reserve Bank of India plans to purchase 80 billion rupees of notes at an open-market auction on Jan. 4, it said in another statement the same day. The yield on benchmark 2022 securities touched a two-year low yesterday.
“The trading environment for bonds became favorable owing to a lack of supply since the government rescheduled the current week’s bond auction,” Mumbai-based analysts at Altius Fincap Markets Ltd., including Rahul Chokshi, wrote in a research note today. The central bank’s debt-purchase plan also supported bonds, they wrote.
The yield on the 8.15 percent notes due June 2022 dropped one basis point, or 0.01 percentage point, to 7.99 percent in Mumbai, according to the central bank’s trading system. It touched 7.90 percent yesterday, the lowest level since Dec. 28, 2010, according to data compiled by Bloomberg.
India has a cash balance of 1.3 trillion rupees and may not exceed its borrowing target for the year through March, according to a government official, who declined to be identified as the information isn’t public. Any additional borrowing, if required, will be capped at 200 billion rupees, according to the official.
The one-year interest-rate swap, a derivative contract used to guard against fluctuations in funding costs, declined one basis point to 7.58 percent, data compiled by Bloomberg show. It fell 14 basis points last year.
To contact the reporter on this story: V. Ramakrishnan in Mumbai at firstname.lastname@example.org