Bloomberg News

Indian 10-Year Bonds Snap Two-Day Loss Before Debt Quota Auction

November 29, 2011

Nov. 29 (Bloomberg) -- India’s 10-year bonds rose for the first time in three days before the nation auctions debt- purchase quotas to foreign investors for the first time since August.

The Securities and Exchange Board of India plans to allocate tomorrow limits that will allow a total of $10 billion of overseas investment in local-currency bonds. The government this month raised the cap on foreign holdings of rupee- denominated debt by 20 percent to $60 billion. European finance ministers are meeting in Brussels today to discuss details on how to boost the European Financial Stability Facility.

“We are expecting buying at the auction” of debt quotas, said A.Y. Shedshale, Mumbai-based deputy general manager at Bank of Maharashtra. “What the market is waiting for is to see if the U.S. and Europe will announce more stimulus measures, which could help Indian bonds.”

The yield on the 8.79 percent bonds due November 2021 declined one basis point, or 0.01 percentage point, to 8.83 percent in Mumbai, according to the central bank’s trading system.

Global funds bolstered their ownership of Indian government and corporate securities by $4.3 billion, raising holdings to a record $22.4 billion on Nov. 14, exchange data show.

The cost of one-year interest-rate swaps, or derivative contracts used to guard against fluctuations in borrowing costs, fell 3 basis points to 8.10 percent, according to data compiled by Bloomberg.

--Editors: Anil Varma, Andrew Janes

To contact the reporter on this story: Jeanette Rodrigues in Mumbai at

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

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