Bond yields edge lower on RBI’s buy back announcement

The yields on 10-year 8.79% - 2021 bonds were trading 3 basis points lower at 7.84% from its previous close of 7.87% on Tuesday

Bond yields edged lower from its previous close, after the central bank announced that it would buy bonds via open market operations given the tight liquidity condition of banking system.

Consistent with the stance of monetary policy and based on the current assessment of prevailing and evolving liquidity conditions, the Reserve Bank has decided to conduct Open Market Operations by purchasing the government securities for an aggregate amount of  Rs 10,000 crore on February 15, 2013.

On the global front, US Treasuries were little changed in Asia on Wednesday, with many investors looking out to a 10-year debt auction and retail sales data later in the day to potentially pull the market out of its recent trading ranges. Meanwhile, Brent crude steadied on Wednesday, holding just below a nine-month high near $119 per barrel on forecasts for a faster-than-expected growth in global oil demand this year.

Back home, the yields on 10-year 8.79% - 2021 bonds were trading 3 basis points lower at 7.84% from its previous close of 7.87% on Tuesday.

The benchmark five-year interest rate swaps were trading 2 bps higher at 7.29% from its previous close of 7.27% on Tuesday.

The Government of India have announced the sale (re-issue) of three dated securities for Rs 12,000 crore (i) “8.12 percent Government Stock 2020” for a notified amount of Rs 3,000 crore (nominal) through price based auction; (ii) “8.20 percent Government Stock 2025” for a notified amount of Rs 6,000 crore (nominal) through price based auction; and (iii) “8.30 percent Government Stock 2042” for a notified amount of Rs 3,000 crore (nominal) through price based auction. The auctions will be conducted using multiple price method. The auctions will be conducted by the Reserve Bank of India, Fort, Mumbai on February 15, 2013 (Friday).

The Reserve Bank of India has announced the auction of 182-day and 91-day Government of India Treasury Bills for notified amount of Rs 5,000 crore. The auction will be conducted on February 13, 2013 using ‘Multiple Price Auction’ method.