India’s 10-year bonds increased for a 10th day, the longest winning streak since November 2009, on optimism federal debt sales will remain within target as public finances improve.
The government has 1.3 trillion rupees ($24 billion) of spare cash, an official said yesterday, asking not to be identified as the information isn’t public. Benchmark yields declined 14 basis points since Dec. 28, headed for the biggest drop since the five days ended June 2, after India deferred to February a debt sale previously scheduled for this week. The finance ministry plans to borrow a record 5.7 trillion rupees in the year through March, according to budget estimates.
“The postponement of this week’s auction signaled the government’s cash balance is comfortable,” said Anoop Verma, a fixed-income trader at Development Credit Bank Ltd. in Mumbai. “These are good days for bond investors as the government is likely to stick to its borrowing target.”
The yield on the 8.15 percent notes due June 2022 fell two basis points, or 0.02 percentage point, to 7.97 percent in Mumbai, according to the central bank’s trading system. The rate fell 52 basis points, or 0.52 percentage point, last year in the first decline since 2008.
The government’s finances are improving after the success of its biggest state-asset sale this fiscal year. India raised at least $1.1 billion last month selling shares in iron ore producer NMDC Ltd., aiding Finance Minister Palaniappan Chidambaram’s goal to narrow the budget shortfall to 5.3 percent of gross domestic product by March.
The Reserve Bank of India plans to purchase 80 billion rupees of sovereign securities at an open-market auction tomorrow, it said in a statement on Dec. 31.
The one-year interest-rate swap, a derivative contract used to guard against fluctuations in funding costs, rose two basis points to 7.5950 percent, data compiled by Bloomberg show.