Yield on 11-yr govt bond nears 9%
With the cut off yield on 11-year government securities (G-secs) during the Friday auction climbing up to 8.95 percent per annum, from 8.86 percent on Tuesday, there were few buyers for a small fraction of the total bonds which were being auctioned.
Meanwhile, the yields on the benchmark 10-year G-sec treasury papers - which were not part of the Friday auction - closed at 8.84 percent; thereby marking an increase over the 8.75 percent figures from the preceding close.
According to a Friday release by the Reserve Bank of India (RBI), G-secs valued at Rs 15,000 crore of various maturities were auctioned by the bank; with the 11-year paper being worth Rs 6,000 crore. In addition, the bank also offered 6-year papers worth Rs 4,000 crore, with Rs 149 crore worth of securities having been devolved on the primary dealers.
Drawing attention to the fact there were no buyers for papers worth this amount, one of the bond dealers said that the Friday auction by the RBI allowed a `10 basis points' hardening of the yields; thus leading to speculations that the bank currently has no evident intentions of stepping in to check the hardening of the yield.
The bond dealer also said that the yields have been pushed higher largely because of "tight liquidity conditions, current rate of inflation which is at elevated levels, the RBI's non-committal approach in its policy stance and strong supply of papers."
