Bond yield rises to 5.68%

Government bonds prices ended up on view that even if big gilt auctions are announced later On Tuesday, Reserve Bank of India would announce Market Stabilisation bond buybacks in tandem with auctions, dealers said.

“Market drew support from view that RBI will most definitely announce MSS bond buyback along with the auctions because nobody would want a repeat of what happened last week,” said a dealer with a UK bank.

Last week, price of the 10-year benchmark 8.24 per cent, 2018 paper had fallen by over Rs 8 after government unexpectedly scheduled Rs 15,000-crore gilt auction without any MSS bond buyback.

 

RBI has been conducting MSS bond repurchases since November along side regular bond auctions so as to keep liquidity in the system constant.

Thus, On Tuesday, the 2018 paper ended the day at Rs 118.24 or 5.6803 per cent after falling to Rs 117.71 on reports that gilt auctions would be announced.