Monday, December 09, 2013

New 10Y bond heading to 9% handle

The Economics affairs secretary just made a press statement that Indian Government will conduct the much feared "Debt-Switch" programme in the market and not with RBI as was previously expected by the market considering the high yield levels.

This practically means INR 50000 Cr of debt supply to the market at a time when there is little interest in the secondary market; even PFs are opting for the yield pick-up from Corporate bonds and State Development loans post the recent change in investment pattern norms.

Even if Government buys back G-Secs maturing in 2015, 2016 and 2017 and issues, say, 15Y papers, the net duration in the market is going to raise sharply. All set for 9% mark even in the new 10Y bond in few trading sessions from now.

Reuters link

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