[Investors Please Listen] Edel Daily Debt - Bond yields flare up on auction devolvement; 10-year tests 6.75%

"Daily Debt Report"

 

Bond yields flare up on auction devolvement; 10-year tests 6.75%  

n               Sovereign yields today opened near yesterday's levels; they however travelled a wide range as bearishness mounted on cut-off yields of the auction. The old 10-year paper (8.24% GoI 2018) travelled a massive 27bps, closing at its high of 6.75% (as expected in our analysis 'RBI rate action', dated March 05 2009).

n               The new 10-year paper (also being auctioned today) opened ~16bps higher amidst the wide spread over the older counterpart of 42bps yesterday. While it traded within the 6.25-6.30% range for most of the day, during the conclusive hour the yield rose sharply (up 18bps) closing at 6.48%; after cut-off, it was ~10bps higher than expected. The spread between the old and new benchmark closed at 27bps.  

n               The INR 120 bn G-Sec auction reported a devolvement in all the three bonds issued (total amount of INR 15.60 bn). The cut-offs released were as: 6.499% for 6.05% 2019, 7.75% for 8.24% 2027 and 7.90% for 6.83% 2039, all of them being 10bps, 14bps and 15bps higher than market expectations.

n               Liquidity was sustained at yesterday's level, excess cash under RBI's reverse repo window holding broadly unchanged at INR 667.80 bn. The overnight money market volumes stood higher at INR 954.50 bn at an unchanged weighted average rate of 3.31% (~20bps below the 3.50% reverse repo).    

n               The 10-year corporate paper reacted adversely to the rising sovereign yields as the AAA rated PFC paper soared 20bps, to close at 9.30%. Rates at the short end too flared after the cut-off announcements; up by 50-75bps.

n               RBI announced after market hours an OMO of INR 70 bn with 50% green shoe option (INR 35 bn). It also announced INR 120 bn government bond auction on March 13 as: 7.46% 2017 for INR 80 bn, 8.35% 2022 and 7.50% 2034 for INR 20 bn each. T-bill worth INR 80 bn would also be auctioned next week.

--~--~---------~--~----~------------~-------~--~----~
Safe Harbor:
The information contained and provided on this Website provides Investment advice for the education of investors. The posts are an information service only. Recommendations, opinions or suggestions are given with the understanding that readers acting on this information assume all risks involved. We do not assume any responsibility or liability resulting from the use of such information, judgment and opinions for Trading or Investment purposes.

You received this message because you are subscribed to the Google Groups "Investors Please Listen !" group.
To post to this group, send email to investorspleaselisten@googlegroups.com
To unsubscribe from this group, send email to
investorspleaselisten+unsubscribe@googlegroups.com For more options, visit this group at http://groups.google.com/group/investorspleaselisten?hl=en
-~----------~----~----~----~------~----~------~--~---