Bloomberg News

India’s Bond Yield Near 3-Year High on Gasoline Price Increase

November 04, 2011

Nov. 4 (Bloomberg) -- India’s 10-year bonds fell, pushing yields toward a three-year high, on concern an increase in gasoline prices will push up inflation.

Indian Oil Corp., the nation’s biggest refiner, increased local gasoline prices yesterday for the third time in six months. The finance ministry will sell 60 billion rupees ($1.2 billion) of new 10-year notes today. It will also auction 40 billion rupees of debt due in 2018 and 30 billion rupees of securities maturing in 2027.

“The increase in petrol prices has added to worries about inflation,” said Vivek Rajpal, a Mumbai-based fixed-income strategist at Nomura Holdings Inc. “Yields are higher also because investors tend to switch to new 10-year paper from the existing notes.”

The yield on the 7.8 percent securities due April 2021 rose two basis points, or 0.02 percentage point, to 8.92 percent as of 9:42 a.m. in Mumbai, according to the central bank’s trading system. The rate touched 8.95 percent on Nov. 1, the highest level for a benchmark 10-year bond since August 2008. The yield has risen seven basis points this week.

Food inflation reached the highest level in nine months after prices of vegetables, milk and meat climbed. An index measuring wholesale prices of agricultural products gained 12.21 percent in the week ended Oct. 22 from a year earlier, the commerce ministry said in a statement yesterday. It rose 11.43 percent the previous week.

The price of gasoline in New Delhi was increased by 2.7 percent to 68.64 rupees ($1.40) a liter, Indian Oil said in its website yesterday.

--Editors: Andrew Janes, James Regan

To contact the reporter on this story: V Ramakrishnan in Mumbai at

To contact the editor responsible for this story: Sandy Hendry at

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