Bonds Rally in India as Das Promises to Support Borrowing Plan
Bonds in India rallied, led by the short-end after the monetary authority refrained from withdrawing cash from the banking system.
(Bloomberg) -- Bonds in India rallied, led by the short-end after the monetary authority refrained from withdrawing cash from the banking system and assured markets it would support the government’s record-borrowing program.
The yield on four-year bonds fell as much as 15 basis points to 7.12% while the 10-year debt also declined by eight basis points to 7.44%. Reserve Bank Governor Shaktikanta Das said the central bank would take all steps needed to ensure an orderly completion of the borrowing plan, without giving details.
“Gains on the shorter end are more because now traders are not expecting rates to be hiked at as fast a pace as the last three months,” said Vijay Sharma, senior executive vice president at PNB Gilts. “It was a hawkish policy, but slightly less than what the market was expecting.”
Yields on benchmark 10-year bonds hit a three-year high this week amid surging crude prices and a renewed rise in US yields. They are already up over 100 basis points this year. New Delhi plans to sell a record 14.31 trillion rupees of bonds this fiscal year.
Yields on top-rated three-year rupee corporate bonds declined by 10-12 basis points, according to traders. That’s the most in a month, according to data compiled by Bloomberg.
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