Bloomberg News

Indian 10-Year Bond Yield to Rise Toward 9%, Morgan Stanley Says

October 10, 2011

Oct. 10 (Bloomberg) -- India’s 10-year bonds will extend five quarters of losses, pushing yields to a three-year high of 9 percent by the end of 2011, as the government increases debt sales, according to Morgan Stanley.

The Reserve Bank of India may reduce the cash reserve ratio for banks and purchase sovereign bonds to inject money into the financial system as government borrowings drain funds, Pieter Van Der Schaft, Hong Kong-based head of Asian interest-rate strategy at Morgan Stanley, wrote in a research note published today.

The yield on the 7.8 percent note due April 2021 jumped 14 basis points, or 0.14 percentage point, to 8.71 percent as of 11:33 a.m. in Mumbai, according to the central bank’s trading system. It rose to 8.72 percent earlier, the highest level for benchmark 10-year rates since August 2008, according to data compiled by Bloomberg.

To contact the reporter on this story: V Ramakrishnan in Mumbai at rvenkatarama@bloomberg.net

To contact the editor responsible for this story: Anil Varma at avarma3@bloomberg.net


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