Monday, May 4, 2009

[Investors Please Listen] Bond Vector - Benchmark yield closes 14bps higher at 6.37%; borrowings scare investors

Benchmark yield closes 14bps higher at 6.37%; borrowings scare investors

n               Sovereign yields travelled higher for most of the day, most trades being concentrated in the liquid benchmark 10-year paper (6.05% GoI 2019 bond). Total volumes on the NDS-OM stood at INR 103.15 bn, with 68% contribution from the two most liquid 5 and 10 year counters.

n               Sentiment on the trading platform remained dull, even as participants took cues from soaring RBI loans and advances to the central government standing at twice the permissible limit of INR 200 bn for the week ended April 24, 2009. Supply fears seemingly took over the investor sentiment that remained sidelined, for the market to close with a sellers' bias; the 10-year closed 14bps higher at 6.37%.  

n               Cash conditions remained buoyant; excess cash under RBI's reverse repo holding was at INR 730.15 bn (only first LAF auction). Overnight money market volumes closed at nearly INR 1 tn lent at a return 42bps lower than the reverse repo level.

n               The INR 25 bn 10-year SDL auction for the West Bengal government concluded with a cut-off yield of 7.10%, nearly 73bps higher than its sovereign counterpart. The auction reported a bid-to-cover ratio of 4.12.  

n               Commercial paper issuance worth INR 6 bn was reportedly lapped up by the market. While RPL managed to raise INR 5 bn for three month tenure at 4%, the National Housing Bank raised INR 1 bn for a three month period at 3.80%. Steel Authority of India too placed a one year CP for INR 10 bn at 5.40%. 

n               The INR, which opened 45paise stronger and should have closed stronger as equity indices attracted foreign flows, stood 32paise higher (from opening level) at close, seemingly on USD buying of oil companies and banks. It currently holds at INR 49.90/USD.


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