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Mint
14-07-2025
- Business
- Mint
India bond yields inch up tracking US peers
MUMBAI, July 14 (Reuters) - Indian government bond yields ended higher on Monday, as traders reacted to elevated U.S. Treasury yields, while looking through a sharp decline in local retail inflation that was largely factored in. The yield on the benchmark 10-year bond ended at 6.3163%, compared with a previous close of 6.2994%. Still, so-called ultra long bond yields declined for a second straight session as investors continued to chase 30-year to 50-year papers. The 30- to 50-year bond yields eased by around 3 bps, after a large state-run player bought a chunk of 50-year bonds on Friday. India's annual retail inflation slowed to 2.10% in June, the lowest since January 2019. The pace of price rise was slower than 2.82% in the previous month, government data showed on Monday, as well as against an estimate of 2.50% in a Reuters poll of 50 economists. "Bonds will largely remain rangebound, with a bias for yields to move up," said Rajeev Pawar, head of treasury at Ujjivan Small Finance Bank. The 10-year U.S. yield rose 8 basis points on Friday and stayed elevated on Monday as traders worried about potentially higher inflation rates in the world's largest economy. The U.S. retail inflation print, due after Indian market hours on Tuesday, is expected to show a 0.3% month-on-month gain, up from 0.1% in May, according to a Reuters poll. "The US treasuries witnessed some sell off on continuing fiscal concerns and Fed minutes that indicated no rate cuts in the near term," said Upasna Bhardwaj, chief economist at Kotak Mahindra Bank. India's short-term overnight index swap rates moved lower amid receiving interest after the local inflation data release, while long-end rates saw paying due to the rise in U.S. yields. The one-year OIS rate ended at 5.54% and the two-year OIS rate was up 2 basis points at 5.51%. The liquid five-year rose nearly 4 basis points to 5.74%. (Reporting by Dharamraj Dhutia; Editing by Ronojoy Mazumdar)
Time of India
12-07-2025
- Business
- Time of India
RBI's 7-day VRRR auction undersubscribed as banks favor lending in overnight market
Mumbai: The central bank's seven-day variable rate reverse repo (VRRR) auction was undersubscribed as banks chose to lend in the overnight market instead of parking funds with Mint Road, dealers said. Lower banking participation was also attributed to the reporting Friday, a day when banks need to report their cash reserve ratio (CRR) compliance to the Reserve Bank of India ( RBI ), treasury officials said. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Do you have a mouse? Play this for 1 minute and see why everyone is crazy about it. Play Game Undo Against the notified amount of ₹2.5 lakh crore, the central bank received bids worth only ₹1.52 lakh crore, which was accepted by the RBI. The cut-off and weighted average rate both came in at 5.49%. The Repo currently is 5.5%. "Usually, there is 20-30 basis points spread between cut-off price and the overnight rates. But on Friday, that spread was lower than 20 bps as overnight rates had risen during the time of auction. So, most banks preferred lending in the overnight market instead of parking with the RBI. The 7-day VRRR was also for a larger amount which also was a bit of a negative," said Rajeev Pawar, head of treasury, Ujjivan Small Finance Bank . VRRR does not permanently remove liquidity , but increases cost of liquidity, thus pushing up overnight rates. Live Events Bank treasury officials said that the aim of this exercise is to ensure that the weighted average call rate (WACR) and the TREPS rate within the liquidity adjustment facility (LAF) corridor. It also indicates that RBI is not comfortable with massive liquidity surplus. The RBI's state objective is to keep the liquidity surplus around 1% of NDTL, which works out to be ₹2.5 lakh crore. The VRRR auction took away some part of the excess liquidity of nearly ₹2 lakh crore that came from reversal of the previous two VRRR operations. Currently, liquidity is in the surplus of ₹3.15 lakh crore.
Time of India
12-06-2025
- Business
- Time of India
RBI buyback sees strong demand with bids doubling notified amount
The Reserve Bank of India (RBI) received bids Rs 53,031 crore against the notified amount of Rs 26,000 crore at the second buyback auction of this fiscal year. At the auction held on Thursday, the central bank accepted 99% of the notified amount. At the first buyback held last week, the RBI received bids worth Rs 27,256 crore, of which the central bank accepted Rs 23,856 crore or 95% of the notified amount, data showed. Buybacks are a way for the government to pay off debt for next fiscal year to reduce its gross borrowing. It also results in RBI infusing durable liquidity into the system. The RBI bought back five government bonds maturing in 2026 at Thursday's auction. The 5.63% 2026 government bond saw the highest demand with bids received at Rs 26,616 crore. Of this, the central bank accepted Rs17,402 crore. 'The strong demand at the buyback auction indicates that banks may have taken this opportunity to lighten their HTM book, especially because there are no OMOs on the horizon,' said Rajeev Pawar, head of treasury at Ujjivan Small Finance Bank . 'In a buyback, banks get to sell short-term bonds and replace them with longer maturity papers and lock-in yields. Further buyback auctions will depend on how the government spending pans out and on evolving liquidity conditions.' Bonds maturing in FY27 are more than double versus this year at Rs 6.48 lakh crore and are consistently high until 2032. The government has also budgeted Rs 2.5 lakh crore for bond switches this year, 60% more than the previous year. In a bond switch, the government replaces bonds maturing in the near term with long-term debt. The RBI, on behalf of the government, is scheduled to conduct an auction on Monday to switch government securities worth Rs 25,000 crore. It will conduct the auction to switch nine government bonds maturing between 2026 and 2029 for papers with maturity between 2032 and 2062.
Economic Times
12-06-2025
- Business
- Economic Times
RBI buyback sees strong demand with bids doubling notified amount
The Reserve Bank of India (RBI) received bids Rs 53,031 crore against the notified amount of Rs 26,000 crore at the second buyback auction of this fiscal year. At the auction held on Thursday, the central bank accepted 99% of the notified amount. ADVERTISEMENT At the first buyback held last week, the RBI received bids worth Rs 27,256 crore, of which the central bank accepted Rs 23,856 crore or 95% of the notified amount, data showed. Buybacks are a way for the government to pay off debt for next fiscal year to reduce its gross borrowing. It also results in RBI infusing durable liquidity into the system. The RBI bought back five government bonds maturing in 2026 at Thursday's auction. The 5.63% 2026 government bond saw the highest demand with bids received at Rs 26,616 crore. Of this, the central bank accepted Rs17,402 crore. 'The strong demand at the buyback auction indicates that banks may have taken this opportunity to lighten their HTM book, especially because there are no OMOs on the horizon,' said Rajeev Pawar, head of treasury at Ujjivan Small Finance Bank. 'In a buyback, banks get to sell short-term bonds and replace them with longer maturity papers and lock-in yields. Further buyback auctions will depend on how the government spending pans out and on evolving liquidity conditions.' ADVERTISEMENT Bonds maturing in FY27 are more than double versus this year at Rs 6.48 lakh crore and are consistently high until 2032. The government has also budgeted Rs 2.5 lakh crore for bond switches this year, 60% more than the previous a bond switch, the government replaces bonds maturing in the near term with long-term debt. The RBI, on behalf of the government, is scheduled to conduct an auction on Monday to switch government securities worth Rs 25,000 crore. It will conduct the auction to switch nine government bonds maturing between 2026 and 2029 for papers with maturity between 2032 and 2062. ADVERTISEMENT (You can now subscribe to our ETMarkets WhatsApp channel)
Time of India
30-04-2025
- Business
- Time of India
Bond Market sees demand surge as RBI's Rs 1.25 Lakh crore OMO plan spurs premium pricing
Live Events (You can now subscribe to our (You can now subscribe to our ETMarkets WhatsApp channel The central bank's bond purchases through open market operations (OMO) on Tuesday saw strong demand, with banks and primary dealers offering bonds double the notified amount to cash in on higher prices. Prices for the bonds were better than in previous auctions and were at a premium from the market, treasury heads offered for this OMO were worth Rs 39,218 crore, versus the notified amount of Rs 20,000 crore. Bonds maturing in the next four to six years saw maximum demand, Reserve Bank of India ( RBI ) data prices of bonds were at a premium from the market and are a factor of demand-supply dynamics. When you don't know how much the RBI is going to buy, then people are willing to sell at a discount also,' said Rajeev Pawar, head of treasury at Ujjivan Small Finance Bank . 'But now the RBI has announced an OMO calendar for May, people are selling at market prices or at slightly better than market prices," he RBI announced on Monday that it will purchase Rs 1.25 lakh crore government bonds via OMO purchases in four tranches spread across May. This announcement drove down yields of government bonds by five basis points, which closed at 6.35%, CCIL data showed.'Now with so much of OMO supply, dealers have sold from their held-to-maturity (HTM) books and now want to sell at a premium from the market prices. This sale of bonds also creates demand for government bonds in the weekly auction,' said Gopal Tripathi, head of treasury at Jana Small Finance Bank This Friday, on May 2, the RBI will also auction the new 10 year paper for a quantum of Rs 30,000 crore.(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
