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Watch on bond yield as RBI declares auction of government securities worth Rs 30,000 crore

While the bond markets will be eyeing the cut-off yield that will be set by the RBI for the 2033 paper on Friday, a Reuters report on a poll of 11 traders said that it is likely to be at 7.69-7.72 per cent

Our Special Correspondent Mumbai Published 14.11.23, 11:31 AM
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The Reserve Bank of India (RBI) on Monday announced the auction of three government securities for a notified amount of Rs 30,000 crore that include the sale (re-issue) of benchmark 7.18 per cent GS 2033 bond. This came even as seven states raised Rs 12,500 crore via bonds of 10-30-year maturities.

The three government securities (GS) that will be put up for auction on November 17 are 7.37 per cent GS 2028 of Rs 7000 crore, 7.18 per cent GS 2033 of Rs 13,000 crore and 7.30 per cent GS 2053 of Rs 10,000 crore. The new 2033 bond was first auctioned in August 2023 where the coupon of 7.18 per cent was set.

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Yields on the benchmark 10-year bond are now trading at 7.28 per cent. They are likely to moderate with retail inflation falling to a four-month low of 4.87 per cent in October.

While the bond markets will be eyeing the cut-off yield that will be set by the RBI for the 2033 paper on Friday, a Reuters report on a poll of 11 traders said that it is likely to be at 7.69-7.72 per cent.

According to Puneet Pal, head-fixed income, PGIM India Mutual Fund, bond yields were steady last week as crude oil sold off towards a more than three-month low even as the West Asian conflict raged.

While the 10-year bond ended the week at 7.30 per cent, almost flat from the preceding week’s closing of 7.31 per cent, Pal said global monetary tightening has come to a pause though rate cuts are still some time away.

“RBI will also be on a long pause with the government taking fiscal steps to manage Inflation. We think that the broad range of the benchmark 10-year bond yield will be between 7.20-7.45 per cent over the next couple of months’’, he added.

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