India’s benchmark bonds due 2022 advanced on speculation yields near the highest level in three months will attract investors.
The rate on the notes rose nine basis points last month, the biggest increase since April 2012, after the government set a record debt-sales target of 6.29 trillion rupees ($116 billion) for the fiscal year that began this week. The increase in yields was probably due to the central bank signaling last month that it has limited room to ease policy and the prospect of bigger bond supplies, according to Barclays Plc.
“We think both concerns are overdone,” analysts at Barclays, including Singapore-based Igor Arsenin, wrote in a research note today. “As such, we think current bond yields are pricing in excessive cautiousness, and we see the recent sell- off as an opportunity to buy.”
The yield on the 8.15 percent notes due June 2022 fell two basis points, or 0.02 percentage point, to 7.97 percent as of 10:18 a.m. in Mumbai, according to the central bank’s trading system. Yesterday’s level of 7.99 percent was the highest since Jan. 2. Barclays predicts the yield will decline to 7.40 percent by September.
The one-year interest-rate swap, a derivative contract used to guard against fluctuations in funding costs, was little changed at 7.46 percent, the lowest level since April 2011, according to data compiled by Bloomberg.
To contact the reporter on this story: V. Ramakrishnan in Mumbai at firstname.lastname@example.org
To contact the editor responsible for this story: James Regan at email@example.com