By -
May 23, 2014
Indian bonds due 2023 headed for the
biggest weekly gain since November on speculation rising cash in
the banking system will spur investment in debt.
The notes advanced for a fourth day today after JPMorgan Asset Management and DSP BlackRock Investment Managers Pvt. predicted a further rally, betting the nation’s new government will boost efforts to curb inflation. Lenders’ overnight borrowings from the central bank to meet cash shortages fell to an average of 87 billion rupees ($1.5 billion) this month, from 123 billion rupees in April, signaling increased fund supply.
The yield on the 8.83 percent debt due November 2023 slumped 15 basis points, or 0.15 percentage point, this week and three basis points today to 8.68 percent as of 9:55 a.m. in Mumbai, prices from the Reserve Bank of India’s trading system show. That’s the biggest weekly drop for benchmark 10-year rates since November.
“Liquidity has been supportive,” said K. Ramanathan, chief investment officer in Mumbai at ING Investment Management Pvt. “There’s a lot of hope and expectation in the market that the new government will join efforts by the central bank to tackle inflation.”
India’s overnight interbank borrowing rate has slid to 7.1 percent from 9 percent at the end of last month. The RBI’s repurchase rate is at 8 percent currently.
JPMorgan Asset sees the 10-year sovereign yield falling to as low as 8.25 percent by year-end, while DSP BlackRock predicts a drop to as low as 8.40 percent.
One-year interest-rate swaps, derivative contracts used to guard against swings in funding costs, declined 14 basis points this week to 8.39 percent, heading for the biggest five-day drop since November, data compiled by Bloomberg show. They fell four basis points today.
To contact the reporter on this story: Shikhar Balwani in Mumbai at sbalwani@bloomberg.net
To contact the editors responsible for this story: James Regan at jregan19@bloomberg.net Anil Varma, Simon Harvey
The notes advanced for a fourth day today after JPMorgan Asset Management and DSP BlackRock Investment Managers Pvt. predicted a further rally, betting the nation’s new government will boost efforts to curb inflation. Lenders’ overnight borrowings from the central bank to meet cash shortages fell to an average of 87 billion rupees ($1.5 billion) this month, from 123 billion rupees in April, signaling increased fund supply.
The yield on the 8.83 percent debt due November 2023 slumped 15 basis points, or 0.15 percentage point, this week and three basis points today to 8.68 percent as of 9:55 a.m. in Mumbai, prices from the Reserve Bank of India’s trading system show. That’s the biggest weekly drop for benchmark 10-year rates since November.
“Liquidity has been supportive,” said K. Ramanathan, chief investment officer in Mumbai at ING Investment Management Pvt. “There’s a lot of hope and expectation in the market that the new government will join efforts by the central bank to tackle inflation.”
India’s overnight interbank borrowing rate has slid to 7.1 percent from 9 percent at the end of last month. The RBI’s repurchase rate is at 8 percent currently.
JPMorgan Asset sees the 10-year sovereign yield falling to as low as 8.25 percent by year-end, while DSP BlackRock predicts a drop to as low as 8.40 percent.
One-year interest-rate swaps, derivative contracts used to guard against swings in funding costs, declined 14 basis points this week to 8.39 percent, heading for the biggest five-day drop since November, data compiled by Bloomberg show. They fell four basis points today.
To contact the reporter on this story: Shikhar Balwani in Mumbai at sbalwani@bloomberg.net
To contact the editors responsible for this story: James Regan at jregan19@bloomberg.net Anil Varma, Simon Harvey
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