India’s bonds advanced for a second day on speculation yields at the highest level this year are luring buyers.

Yields on government notes due 2021 jumped 20 basis points this month as the government plans to borrow a record 5.69 trillion rupees ($113 billion) fiscal year beginning April 1, a 12 percent increase over this year. Investors are probably adding to their holdings as no auction is due this month, according to R.S. Chauhan, chief dealer of fixed-income and currencies at State Bank of Bikaner & Jaipur. (SBBJ)

“Bonds have gained slightly because yields have jumped quite a bit this month,” Mumbai-based Chauhan said.

The yield on the 8.79 percent bonds due November 2021 was 8.41 percent in Mumbai, compared with 8.42 percent yesterday, according to the central bank’s trading system. The rate reached 8.43 percent earlier, matching the level touched on March 16, the highest since Dec. 30.

One-year interest-rate swaps, or derivative contracts used to guard against fluctuations in funding costs, fell two basis points, or 0.02 percentage point, to 8.20 percent, data compiled by Bloomberg show.

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

To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net