You are using an older browser version. Please use a supported version for the best MSN experience.

India 2023 bonds drop as yields at eight-month low deter buyers

LiveMint logoLiveMint 09-06-2014 Shikhar Balwani

Mumbai: India’s government bonds due 2023 ended a four-day rally on speculation yields at an eight-month low deterred buyers.

The notes rallied last week, with the yield slumping 13 basis points to 8.51 %, after the central bank said it could ease monetary policy should inflation slow more than anticipated. The Reserve Bank of India (RBI) aims to curb consumer-price gains, which were 8.59% in April, to 8% by January 2015 and 6% a year later.

The yield on the 8.83% notes due November 2023 rose four basis points, or 0.04 percentage point, to 8.55% in Mumbai, according to prices from the RBI’s trading system.

“Some profit-booking was expected after the rally plus there is speculation that the government will soon announce a new 10-year bond, which is impacting demand for the current one,” said C. Nageswara Rao, manager for treasury and funds management at Karur Vysya Bank in Karur in southern Tamil Nadu state. “We expect the 2023 bonds to trade between 8.50% and 8.60% before the inflation data.”

India will release data on consumer prices for May on 12 June and wholesale-price inflation figures on 16 June. RBI governor Raghuram Rajan, who has raised the benchmark repurchase rate by 75 basis points since taking charge in September to rein in prices, left it unchanged at 8% for a second straight meeting on 3 June.

One-year interest-rate swaps, derivative contracts used to guard against swings in funding costs, jumped six basis points, the most since 2 April, to 8.22%, data compiled by Bloomberg show. They slumped 22 basis points last week to the lowest level since July 2013. Bloomberg

More From LiveMint

image beaconimage beaconimage beacon