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Time of India
4 days ago
- Business
- Time of India
RBI accepts 95% of bond buyback ahead of monetary policy review
Mumbai: The Reserve Bank of India (RBI) Thursday accepted 95% of the total amount notified in this fiscal year's first bond buyback a day ahead of the bi-monthly monetary policy review, although the bids received were not as large as those in similar exercises conducted in January this year. The low enthusiasm comes in the run up to the monetary policy committee (MPC) meeting set on Friday, as the markets didn't seem too keen to sell short-term debt on expectations of profit booking in these assets in the future, money market traders said. Against a notified amount of ₹25,000 crore, the RBI received bids worth ₹27,256 crore, of which, the central bank accepted offers of ₹23,855 crore, data showed. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Migrate with ease from Window 10 to Window 11 with Lenovo Lenovo Learn More Undo "The policy on Friday may alter prices, especially for short term bonds. Since this buyback auction was so close to the MPC, the market did not seem very enthusiastic to sell," said Gopal Tripathi, head of treasury, Jana Small Finance Bank . Buybacks are a way for the government to pay off debt for next fiscal year to reduce its gross borrowing. Bond buybacks also allow the RBI to infuse durable liquidity in the system. Bonds Corner Powered By India plans increased bond buybacks and switches to secure sovereign rating upgrades India is likely to increase bond buybacks and switches to longer maturities this fiscal year to lower its combined fiscal deficit, aiming for sovereign rating upgrades that have remained unchanged for nearly two decades. Economists suggest that maintaining the fiscal gap below 7% of GDP is crucial for rating agencies to consider an upgrade, with the government budgeting ₹2. India bond traders suggest borrowing tweak to bring down long-term yields, sources say India's favoured 5-year bond trade loses steam with rate cuts priced in, fund managers say Vedanta raises Rs 5,000 cr through NCDs India long duration bonds rise on bets of dovish RBI policy Browse all Bonds News with
Time of India
21-05-2025
- Business
- Time of India
Moody's downgrade ripples through bond market, causes worries for stocks
Moody's U.S. debt downgrade is raising concerns that investors could reevaluate their appetite for U.S. government bonds, with the potential for rising yields to put pressure on stocks that are trading at elevated valuations. Moody's decision to downgrade the U.S. debt rating by a notch late last week due to mounting government debt and rising interest expenses has rekindled fears of a broader investor reappraisal of U.S. sovereign debt, which could drive up borrowing costs across the economy. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Moose Approaches Girl At Bus Stop In National Capital Region - Watch What Happens Happy in Shape Undo "Every time something like this happens, investors just think maybe they should shift a little more out of the U.S.," said Campe Goodman, fixed-income portfolio manager at Wellington Management Company. Bonds Corner Powered By Moody's downgrade ripples through bond market, causes worries for stocks Moody's downgrade of U.S. debt is fueling concerns about investor appetite for U.S. government bonds, potentially driving yields higher. Rising yields could pressure stocks with elevated valuations, as they represent increased borrowing costs and investment competition. While a trade truce offers some optimism, the downgrade and proposed tax cuts raise concerns about the U.S. fiscal trajectory. SBI to raise $3 billion through senior unsecured notes in FY26 How will higher anchor investor allocation impact lower rated bond market? RBI accepts lower bond purchase amount in first FY26 OMO auction Sebi simplifies operational process of cash flow disclosure in corp bond database Browse all Bonds News with Benchmark 10-year yields, which influence mortgage rates as well as borrowing costs for companies and consumers, rose to over 4.5% early on Monday but the selloff then moderated. Yields move inversely to prices. On Tuesday, the bond market selloff continued, with the 10-year yield last seen at 4.48%, slightly above where it closed on Monday. Longer-dated 30-year yields rose more sharply, hitting a high of over 5% on Monday, the highest since November 2023, and flirting with that level again on Tuesday. Live Events Higher yields have repercussions for stocks, analysts and investors say, as they represent higher borrowing costs for companies as well as greater investment competition from fixed income . Matthew Miskin, co-chief investment strategist at Manulife John Hancock Investments, said a rise in 10-year yields beyond 4.5% could be a headwind for stocks. "I think what markets are grappling with, is if the 30-year is breaking out, does that mean the rest of the curve is next?" Miskin said. Over the past few years, stocks have come under pressure during some instances when Treasury yields moved above 4.5%, with sharply rising yields often negatively correlated with stock performance. One prominent example is late 2023 when the S&P 500 slid sharply as the 10-year yield ascended to 5%. In a note on Monday, Morgan Stanley equity strategist Michael Wilson said 4.5% on the 10-year yield has been "an important level" for equity market valuation over the past two years, with stocks tending to face valuation pressure when 10-year yields breach that threshold. The price-to-earnings ratio for the S&P 500, based on earnings estimates for the next 12 months, was at 21.7 as of Monday, well above its long-term average of 15.8, according to LSEG Datastream. Wilson, however, said while a break above 4.5% in the 10-year yield "can lead to modest valuation compression ... we would be buyers of such a dip," he said in the note, citing the recent U.S.-China trade truce as positive for equity markets. The downgrade has come as Republicans in Congress seek to approve a sweeping package of tax cuts aimed at boosting economic growth that at the same time could add trillions to the $36 trillion U.S. public debt pile, exacerbating concerns highlighted by Moody's over the U.S. fiscal trajectory . It also follows a detente in the trade war sparked by President Donald Trump's imposition of tariffs on U.S. trade partners. While tariffs are largely seen as being a drag for the economy, a recent trade breakthrough with China had sparked market optimism that their impact would be more muted than feared. "You move from fears of stagflation, which was low growth and tariff-led inflation, to a better growth backdrop but probably not a better inflation or fiscal backdrop, as you still have this big tax bill getting pushed through," said Ross Mayfield, investment strategist at Baird. Federal Reserve officials on Monday said the Moody's downgrade could have repercussions for the U.S. economy by raising the cost of capital. The ratings cut was unlikely to trigger forced selling of Treasuries, as major fixed-income indices only require securities to maintain an investment-grade rating or have no specific sovereign rating guidelines, analysts at BofA Securities said in a note on Monday. Still, it could cause the yield curve to steepen, they said, with long-dated yields rising due to worsening investor sentiment around the long-term prospects of U.S. debt. "There could be a time when the bond market gets quite worried that we're continuing to stimulate an economy that's not weak," Goodman said.
Time of India
13-05-2025
- Business
- Time of India
Foreign banks dump $3 billion worth g-secs amid India-Pak tensions
Mumbai: Foreign banks and primary dealers dumped nearly $3 billion worth of Indian government securities over Thursday and Friday amid escalating India-Pakistan tensions . But traders expect them to return as geopolitical risks showed signs of cooling over the weekend, likely lowering yields by 4-5 basis points Tuesday. Traders believe the 10-year benchmark is likely to settle near 6.32-6.34%, following the recent border de-escalation and ceasefire announcement. They said the sudden selling last week was driven by concerns of a wider military conflict after cross-border strikes intensified, triggering a rush to pare exposure to risk assets. The 10-year benchmark yield had spiked nearly 10-12 basis points recently. Bonds Corner Powered By Foreign banks dump $3 billion worth g-secs amid India-Pak tensions Traders believe the 10-year benchmark is likely to settle near 6.32-6.34%, following the recent border de-escalation and ceasefire announcement. Is a US recession imminent and what would be the impact on India? How should we manage a robust portfolio in this scenario? Will NaBFID successfully navigate offshore bond market? Indian bond yields snap 7-week falling streak due to border conflict Indian bond yields climb as traders panic sell on widening border conflict Browse all Bonds News with While there was sharp movement in G-sec yield last week, it was not primarily due to foreign investors pulling out and trader positioning in response to geopolitical uncertainty only but also responding to the US yield movement. This has caused a pullback in yields from the recent highs around 6.44% toward the previous consolidation zone 6.32-6.34%. Live Events Global cues, especially US Treasury yields rising 70-80 basis points over a few days, are also influencing India's fixed income market. "The 10-year yield may cool off temporarily to the 6.32-6.34% levels due to the ceasefire and position unwinding, but that's just a knee-jerk move," said Ashhish Vaidya, managing director & head - Treasury & Markets, DBS Bank India. "The broader short term tone remains cautious, with upward pressure persisting unless global yields, especially in the US, begin to ease meaningfully, which will likely set the trend for making the Em debt more attractive." Yields on 10-year G-sec, which was at 6.3% on 23 April has risen 6.44% at the end of last week. In the longer term, if RBI cuts the repo rate to 5.50%, experts say, yields could fall to 6%, offering investors who entered at 6.40%-6.44% a potential gain and additional returns, higher than earlier estimates. "There have been de-escalations on the border and a cease fire, so I do expect bond yields to soften by about 4 basis points on Tuesday and I am expecting yields to close at about 6.33%," said Mataprasad Pandey, vice president, Arete Capital Services. "I had given an investment call on Thursday when yields went up to 6.44% to 'buy.' In the longer term, Pandey said that assuming RBI cuts rates to a terminal repo of 5.50%, yields will likely fall to 6%. In such a scenario, investors who bought when yields were at 6.40-6.44% would see more capital appreciation.
Time of India
05-05-2025
- Business
- Time of India
World's riskiest bonds lure traders back after tariff turmoil
Investors are dipping their toes back into some of the riskiest emerging-market bonds , snapping up high-yield government debt that has been made cheap by tariff-induced volatility . Money managers argue that some prices have fallen to a level that justifies taking on the risk of sovereign defaults , which they say has been overblown. In April alone, the extra yield investors demand to own dollar-denominated junk bonds from emerging markets over Treasuries widened 37 basis points to 634 basis points. Meanwhile, credit-default swaps - a type of protection against defaults - saw limited deterioration, with a broad index trading far below levels seen ahead of the last wave of debt meltdowns in 2022-2023. While tariff concerns haven't vanished and the risk of a prolonged US economic downturn isn't fully priced in, the move into high-yield is a window into how some money managers believe that the worst of President Donald Trump's global trade war is over. They are adjusting their portfolios to take on more risk, wagering that fundamentals in some of the world's most vulnerable nations will remain resilient. Agencies Bonds Corner Powered By World's riskiest bonds lure traders back after tariff turmoil In April alone, the extra yield investors demand to own dollar-denominated junk bonds from emerging markets over Treasuries widened 37 basis points to 634 basis points. Meanwhile, credit-default swaps - a type of protection against defaults - saw limited deterioration, with a broad index trading far below levels seen ahead of the last wave of debt meltdowns in 2022-2023. RBI issues fresh 10-year bond, yield 6.32% at close Scott Bessent wants Fed to yield on rates RBI's bond purchases set to surpass Covid era levels Foreign funds sour on US corporate bonds as Trump sows chaos Browse all Bonds News with It's an investment that is so far fairly limited but catching on. JPMorgan Chase & Co. cited the appetite for higher-yielding opportunities among its key takeaways from an investor survey carried out during the International Monetary Fund and World Bank meetings in Washington last month. For good reason: The asset class has been one of the brightest spots in emerging markets in recent years. In 2024, some of the notes handed triple-digit gains to investors. It hasn't worked out that way so far this year, as investors moved to take profits in the run-up to Trump's levies. Live Events A Bloomberg gauge of EM high-yield dollar bonds is up about 1% this year, lagging an index tracking investment-grade bonds from emerging markets, which has advanced close to 3%. Spreads for countries like Egypt, Ivory Coast, Benin and Senegal have been on the rise since April 2, when Trump announced a shift in his tariff policy. Fears Allayed Recent remarks from US Treasury Secretary Scott Bessent signaling that the Trump administration will try to influence international financial institutions such as the IMF were also positive, according to Vontobel's de Sousa, because they allay fears of a US withdrawal. Bessent said last month that both institutions are 'falling short,' though he made clear that he sees a need for the Washington-based institutions. Thys Louw, a portfolio manager at Ninety One in London, points to the role bilateral and multilateral lenders are playing and the fact that some countries are diversifying their financing. He brushed off speculation that the US and institutions like the IMF will pull back support for developing nations. 'We've seen some pockets of value in EM, especially within HY where generally fundamentals have remained resilient and reform progress has been broadly positive,' said Louw, who likes bonds from Ivory Coast, Egypt and Senegal. To bond fund managers running the $3.5 billion TCW Emerging Markets Income fund, there's room for an additional widening in spreads thanks to a larger-than-expected slowdown in global economic growth this year. However, they recently told clients that they 'are seeing value creation as default risk in certain segments of the market appears overpriced.' London-based hedge fund Frontier Road Limited says that emerging-market credits will continue to benefit from what the firm calls 'TAMA,' meaning 'there are many alternatives' to US mega-stocks, according to an April 14 note to clients seen by Bloomberg. Portfolio manager Martin Bercetche pointed to countries such as Egypt and Nigeria, where spreads have widened amid tariff uncertainty even though these economies' combined exports to the US are less than $6 billion. Those types of disconnects provide openings that the fund can take advantage of, he said.
