Economics
Bond Bonanza to Help India Battle World's Top Bad Debt Pile
- Default risk on debt of Indian banks nosedived in July
- Sovereign bond rally set to give treasuries windfall gains
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One of Asia’s best bond rallies is bolstering Indian banks’ efforts to accelerate clean-up of the world’s worst bad-loan pile.
The benchmark 10-year sovereign bond yield dropped about 50 basis points in July, extending the past year’s decline to more than 130 basis points. It fell another 8 basis points on Friday. Each basis point fall in the yield adds 3.5 billion rupees ($50 million) to banks’ treasury gains, boosting their ability to writedown bad loans, estimates by ICRA Ltd. show.