The weekly government bond auction sees firm demand, say dealers

The weekly government bonds auction saw a firm demand as banks stocked up on bonds at attractive yield levels, dealers said.

The Reserve Bank of India set the cut-off yield on the 7-year, 14-year, and 40-year bond at 7.24 per cent, 7.31 per cent, and 7.42 per cent respectively.

“The demand in the 14-year paper was from every segment, be it banks, mutual funds, or insurance companies,” a dealer at a state-owned bank said. “The 7-year paper was in demand from public sector banks,” he added.

The cut-off at the auction was better than expected, which weighed on the yields in the secondary market by the end of the trade.

 

The yield on the benchmark 10-year government bond fell by 3 basis points on Friday tracking a fall in US Treasury yields coupled with a firm demand at weekly auction. The benchmark 10-year bond yield settled at 7.21 per cent on Friday, against 7.25 per cent on Thursday.