"Daily Debt Report"
Sovereign yields harden after OMO cut-offs and lower purchase
n The old benchmark bond, which was to be purchased by RBI as a part of its OMO, traded within the 6.27-6.31% range most of the day in expectation of an upbeat cut-off. The final hour of trade reported cut-off at 6.26% for the 10-year bond (below expectations), pushing the closing level of the yield 6bps higher to 6.42%.
n RBI also purchased INR 10 bn less than the planned amount of INR 60 bn after no bids for the 7.40% GoI 2035 were accepted. Spread between the old and new benchmark yields widened (contrary to RBI's intention through OMO of 8.24% GoI 2018) 10bps since yesterday, to 30bps.
n Amount parked under RBI's reverse repo declined significantly as the LAF auction was conducted for a period of five days; net LAF volumes declined by INR 112.90 bn to INR 291 bn. Overnight call rate too closed 20bps higher since amount borrowings were for a 5-day period although volumes sustained at INR 940 bn.
n RBI in addition to its five-day LAF also conducted a two-day LAF auction in view of the disruption of normal work on February 20. The latter reported reverse repo volumes of INR 90.20 bn and no volumes under the repo.
n Annual inflation for week ended February 7 was released 47bps lower at 3.92% on a W-o-W basis. Price index for the major manufacturing group declined 0.4% (contributed by price decline in basic metals alloys and metal products, leather and leather products, machinery and machine tools within the 1.2-1.8% range).
Highlight of the day
n Primary issuances in the CD segment have subsided from the near INR 20 bn level sustained over the past two weeks to INR 2.75 bn today as issuers await a much anticipated rate action (a likely 50bps reduction in the policy rates) to price their issuances lower.
n The OMO cut-off yields were as: 6.26% for 8.24% GoI 2018 bond and 6.73% for 7.94% GoI 2021 bond.
No comments:
Post a Comment