Bonds Higher For Third Day

Yields lower across the curve in India, advancing for a third day on expectations healthy advance-tax revenues could lead the RBI to reduce the amount of debt supply bought to market. Yields in the 10-year sector remain stubbornly high though, 10-year yield is down 0.6bps, while 7-year yields are down 4.3bps. Meanwhile, participants look ahead to state auctions later today, last week discount margins at auction fell.

• Data yesterday showed the trade deficit narrowed more than expected, which could also help support bonds. The trade deficit dropped to $12.62bn, the lowest since December thanks to a sharp drop in imports.
  • The RBI announced details of Friday's INR 290bn auctions:
    • INR 110bn 5.15% 2025 bonds
    • INR 110bn 5.85% 2030 bonds
    • INR 70bn 6.76% 2061 bonds
• Elsewhere, there were reports that India's regulator (SEBI) favours stricter rules governing valuation of perpetual bonds. SEBI is trying to find a middle ground on valuing the bonds to appease the finance ministry and mutual funds, some clauses could be tweaked before the implementation date of April 1.