The yield on government bonds fell today on rating downgrade for Greek sovereign bonds and indications of a drop in headline inflation for April.
In the most-traded 7.02 per cent government paper maturing 2016 and 8.20 per cent paper maturing 2022, yields softened to close at 7.57 per cent (yesterday’s close at 7.58 per cent) and 8.03 per cent (8.09 per cent), respectively.
The 2016 paper had become very liquid after its auctions last week, and also because traders were more keen to trade shorter papers until there was a stable benchmark gilt in the market, said a dealer with a bond house.
The yield on the 10-year benchmark (6.35 per cent, 2020) was flat at 8.09 per cent, according to Clearing Corporation of India data.
Dealers said ratings agency Standard & Poor’s downgrade of Greek debt to “junk” status and the comments of the government official that headline inflation for the month of April could be around 9 per cent, compared with 9.89 per cent in March, weighed on the yield trend.
Total turnover on the Negotiated Dealing System (NDS) platform was high at Rs 11,740 crore. The top-traded security on the NDS order matching system was 7.02 per cent, 2016 paper with a turnover of Rs 5,470 crore. On Friday, the government will auction Rs 5,000 crore each of a new 10-year paper as well as 7.38 per cent 2015 bond. It is also likely to raise Rs 2,000 crore through the sale of 8.28 per cent, 2032 bond.
