India’s 10-year bonds gained for a third day, pushing the yield to the lowest level in more than a month, on speculation a central bank plan to buy government debt will boost demand for the securities.
The Reserve Bank of India will offer to purchase a total of 120 billion rupees ($2.2 billion) of notes due in 2018, 2020, 2022 and 2027 at an open-market auction today, it said in a statement last week. The RBI may buy as much as 1 trillion rupees of fixed-income securities during the rest of the fiscal year that ends March 31, Barclays Plc estimates.
“We remain bullish on Indian government bonds and recommend an overweight duration stance from a portfolio perspective,” Barclays analysts including Singapore-based Rohit Arora said in a research note today. “Bond purchases announced by the RBI should help ease liquidity and lower yields.”
The yield on the 8.15 percent notes due June 2022 declined to 8.169 percent as of 9:50 a.m. in Mumbai, from 8.174 percent yesterday, according to the central bank’s trading system. That is the lowest level since Oct. 29.
The central bank, which last held a debt-purchase auction in June, picked up 820 billion rupees of securities in the first quarter of this fiscal year to boost the availability of funds in the financial system.
The one-year interest-rate swap, a derivative contract used to guard against fluctuations in funding costs, was little changed at 7.73 percent today, data compiled by Bloomberg show.
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