Indian Bonds Gain for a Second Day as High Yields Attract BuyersShikhar Balwani
India’s 10-year bonds rose on speculation yields higher than 9 percent attracted buyers.
Ten-year yields surged 30 basis points to 9.1 percent in four trading sessions through April 7 on concern demand for existing notes will suffer due to increased issuance by the government. Minutes of the Federal Reserve’s March meeting released yesterday indicated the U.S. central bank might have to keep interest rates at levels considered below normal for longer, supporting emerging-market assets.
The yield on the 8.83 percent sovereign bonds due November 2023 fell three basis points, or 0.03 percentage point, to 9.00 percent in Mumbai, prices from the central bank’s trading system show. It rose to 9.10 percent on April 7, the highest level for benchmark 10-year notes since November, before sliding seven basis points yesterday. Financial markets were shut April 8 for a local holiday.
“There was a sense of fatigue after the sharp rally in yields and we have seen some value buying in the last two days,” said Anoop Verma, vice president for treasury at DCB Bank Ltd. in Mumbai. “The Fed comments too have had a subconscious impact.”
India will auction 160 billion rupees ($2.7 billion) of debt tomorrow, the Reserve Bank of India said last week. That’s the second sale for the fiscal year that began April 1 after the government sold an equal amount of securities on April 4.
The government may borrow 3.68 trillion rupees, or 62 percent of the full-year issuance plan, in the April-September period, Economic Affairs Secretary Arvind Mayaram said March 28.
One-year interest-rate swaps, derivative contracts used to guard against swings in funding costs, fell two basis points to 8.62 percent, according to data compiled by Bloomberg. They climbed nine basis points last week.