Markets Await OMO & Auctions

The RBI announced auction details for Friday March 12, a total of INR 240bn across four lines will be for sale:

• INR 40bn 4.48% 2023
• INR 40bn FRB 2033
• INR 110bn 6.22% 2035
• INR 50bn 6.67% 2050
• Foreign outflows from Indian bonds remain heavy, with just seen days of net inflows since the start of February. Latest data shows foreign funds sold a net INR 765m last week.
• Asian investment-grade dollar bond spreads are under pressure, widening a further 5bps today, after a 3bps jump yesterday. That leaves them set for the biggest daily expansion since March last year. Some companies have reacted to the jump in yields by putting off debt sales. Indian Railway Finance has scrapped an offering of dollar securities.
• Markets await the results of INR 216.7bn of bond sales by the state government for cues on investors' appetite for debt. Participants also await the increased purchase size Operation Twist due on Wednesday; the RBI will purchase INR 200bn of longer dated securities and sell INR 150bn of shorter dated debt. The twist operation, and a drop in US treasury yields and oil prices are expected to support Indian bonds during the session.